Wall Street follows European stocks lower despite US economy growing 2.8% in third quarter

Wall Street was lower by the time of the European close on Wednesday despite the US economy growing faster than its European rivals in the last quarter, climbing 2.8%.

The reading was equivalent to 0.7% growth quarter-on-quarter, much faster than the UK’s 0.1% growth, and the 0.4% recorded in the eurozone.

On trade, the US trade deficit has narrowed to $99.1bn in October, down $9.6bn from the $108.7bn deficit recorded in September.

Meanwhile, the personal consumption expenditures (PCE) price index rose by 2.3% in the year to October, up from 2.1% in September to match August’s reading. Stripping out food and energy, and core PCE rose to 2.8% from 2.7%.

The Federal Reserve favours PCE as a good measure of inflationary pressures in the US economy.

It came as the FTSE 100 ( ^FTSE ) and European stocks were mostly lower as investors also weighed up the threat of tariffs from Donald Trump.

The president-elect rattled financial markets on Tuesday by announcing he would impose 25% tariffs on Canada and Mexico, and an extra 10% on China, in a crackdown on immigration and drugs.

Economists at Deutsche Bank have calculated that if Trump’s threatened tariffs were fully implemented, US core PCE inflation for 2025 could increase from 2.6% to 3.7%. Before Trump’s victory the assumption was for 2.3% inflation in 2025.

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