COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

Stocks rise as GDP fuels stimulus bets, China crunch eases

Stock prices rallied again Wednesday as economic news suggested the Federal Reserve may not be easing stimulus efforts any time soon.

The Dow Jones Industrial Average gained 149.83 points to 14,910.14. The Nasdaq Composite Index rose 28.34 points to 3,376.22 and the S&P 500 Stock Index was up 15.23 points to 1,603.26.

The Commerce Department on Wednesday released the final reading of the U.S. economy for the first quarter of 2013. The gross domestic products, the sum of all goods and services produced in the first three months of the year, originally was estimated to have increased 2.4 percent. However, the revised report showed an increase of just 1.8 percent.

The news sent gold prices down by $45.30 to $1,229.80 an ounce, the lowest level since August 2010. Oil was little changed, up 18 cents to $95.50 a barrel.

Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC) rose at least 0.7 percent as financial stocks rallied. Boeing Co. (NYSE: BA) and Microsoft Corp. (Nasdaq: MSFT) jumped more than 2 percent to pace gains in the Dow Jones Industrial Average.

“We’ve had a relatively sharp sell-off over a couple of days and we’re getting a bounce here,” said James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.6 billion in assets. “Weaker economic numbers may be met with favor by the market because it can suggest that the Fed can slow the tapering process or not taper if the economy looks weaker than expected.”

The S&P 500 climbed 1 percent Tuesday after reports on durable-goods orders, new house sales and consumer confidence bolstered confidence in the economy. The gauge has still retreated 4 percent from a record high reached May 21 as Federal Reserve Chairman Ben Bernanke said the central bank may start paring quantitative-easing measures this year if the recovery continues to improve in line with forecasts.

Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147 percent from its March 2009 low.

Fed Bank of Richmond President Jeffrey Lacker said he expects the U.S. expansion to remain “sluggish” for “a couple more years,” and Wednesday’s downward revision to first-quarter growth is in line with his outlook. Lacker, who doesn’t vote on the Federal Open Market Committee this year, said he sees growth of about 2.25 percent in 2014.

All 10 industries in the S&P 500 increased Wednesday, with health care companies climbing the most. UnitedHealth Group Inc. (NYSE: UNH) jumped 1.7 percent to $64.78 while Johnson & Johnson (NYSE: JNJ) rallied 1.9 percent to $86.99.

Pandora Media Inc. (NYSE: P) gained 8 percent to $17.73. Cowen & Co. analyst John Blackledge boosted his rating of the biggest online radio service to “outperform,” the equivalent of “buy,” from “market perform,” following news that the number of U.S. listeners in cars topped 2.5 million.

Hartford Financial Services Group Inc. (NYSE: HIG) added 2.8 percent to $29.99. The insurer boosted its plan for buybacks and lifted its dividend by 50 percent after Chief Executive Officer Liam McGee sold assets to simplify the company.

Teradata Corp. (NYSE: TDC) surged 3.9 percent to $50.40. Morgan Stanley (NYSE: MS) said shares of the database management company represent a buying opportunity after a recent slump, citing improving demand for data warehouses. The stock has fallen 19 percent this year, compared to a 12 percent increase in the S&P 500.

Barrick Gold Corp. (NYSE: ABX), the world’s largest gold miner, dropped 8.3 percent to $14.78, the lowest in a decade. Newmont Mining Corp. (NYSE: NEM) slid 5.9 percent to $27.22. Materials producers had the weakest performance among 10 S&P 500 groups as gold and silver tumbled after Tuesday’s U.S. economic data bolstered the case for the Fed to reduce stimulus.

Apple Inc. (Nasdaq: AAPL) slid 1.1 percent to $398.07, the lowest level since April. The maker of iPhones and iPads has fallen 14 percent from a May 8 peak, and is down 43 percent from a record high reached in September.




Bloomberg News contributed to this report.



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New York Stock Exchange: www.nyse.com
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