Closing Bell: Stocks Add to Tuesday’s Gains on Tepid GDP Data

gross domestic product
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Stocks advanced for a second straight day despite data showing the economy grew at a slower pace during the first quarter than previously thought. The Commerce Department reported Wednesday that gross domestic product expanded at an annual rate of 1.8 percent in the first quarter, down from a previously reported 2.4 percent increase.

Still, the the Dow industrials (^DJI) added 150 points, its second day of triple-digit gains, to close at 14,910. The SP 500 (^GPSC) added nearly 16 points to end at 1,604, and the Nasdaq (^IXIC) jumped 28 to 3,376.

Investors may have decided that the slower-growing economy will persuade the Federal Reserve to delay any plans to pull back on stimulus measures, the Associated Press reported. Those measures, which include buying bonds, are meant to prop up the economy by keeping interest rates low and encouraging people to buy stocks.

The weaker-than-expected growth in GDP sent bonds lower. The yield on the 10-year Treasury note, a benchmark for many kinds of loans, fell to 2.55 percent from 2.61 percent late Tuesday. The yield had risen sharply in recent weeks in reaction to comments by the Federal Reserve that it may soon start to trim back its bond-buying program, as well as positive economic news including increased home sales (driven by eager home buyers racing to lock in low mortgage rates).

Among companies making big moves in trading Wednesday:

  • Shares of Sprint Nextel (S) rose more than 1.5 percent following news that the company’s shareholders had agreed to a $21.6 billion takeover by SoftBank, a Japanese mobile carrier. Dish Network (DISH) recently dropped its offer to buy Sprint after SoftBank increased its bid price, and may set its sights on smaller T-Mobile USA (TMUS), which, as the TheStreet.com notes, is the last remaining U.S. nationwide carrier.
  • Fertilizer maker Mosaic Co. (MOS) fell after Citigroup (C) analysts downgraded the stock to “neutral” from “buy,” citing a hold-up in the company’s stock buybacks and questions over demand for fertilizer. The stock fell $1.01, or 1.8 percent, to $54.90.
  • Gun-manufacturer Smith Wesson Holding (SWHC) fell, even after reporting that its profits doubled, as quarterly revenue missed analyst forecasts. The stock lost 21 cents, or 2.1 percent, to $9.78.
  • General Mills (GIS), whose products include Cheerios and Nature Valley granola bars, fell after reporting earnings predictions that came in slightly below analyst estimates. The stock declined by 24 cents, or 0.5 percent, to $48.09.

What to Watch Thursday:

ConAgra Foods (CAG), Nike (NKE) and Winnebago Industries (WGO) are scheduled to report earnings Thursday. Nike’s results are due after market close. Analysts expect the maker of athletic apparel to report per-share earnings of 75 cents on revenue of $6.64 billion, based on consensus estimates.

On the economic calendar, the Labor Department reports weekly jobless claims, and the Department of Commerce issues latest data on personal income and spending, both at 8:30 a.m. ET. At 10 a.m., watch for pending home sales for May from the National Association of Realtors, and at 11 a.m., the Kansas City Fed releases its latest manufacturing index.

Compiled from staff and wire reports.

Article source: http://www.dailyfinance.com/on/stock-market-news-first-quarter-gdp/

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