Wall Street posts modest gains despite downward GDP revision
U.S. stocks were still up modestly on Wednesday as investors seemed to overlook a downward revision to first quarter GDP, and focused on continuing the momentum seen a day earlier on the back of encouraging economic data and as central banks made efforts to ease worries.
Just before the start of the lunch hour, the Dow was up 78 points to 14,838, rising to as high as 14,899.96 earlier, while the Nasdaq gained 20 points to 3,368 and the S&P 500 added 8 points to 1,596.
The final revision to first quarter gross domestic product came with a cut to 1.8% from an earlier estimate of 2.4%. Economists had expected the report to reiterate first quarter growth of 2.4%, but the news didn't seem to faze investors, which chose to focus on what lies ahead for the economy in regards to the Fed, with improving figures reported of late.
In the U.S. on Tuesday, markets rallied after investors were positively surprised on data that included new home sales, durable goods orders and consumer sentiment. The Dow ended up 100.75 points, or 0.69%, to 14,760.31.
The strong U.S. data took its toll on gold, however, as the improving economy suggests that the Fed will likely start to taper its quantitative easing later this year. Gold futures were lately down by $42 to $1,233 an ounce. The yellow metal has fallen about 25% so far this year.
On the corporate front, General Mills Inc. (NYSE:GIS), the maker of Cheerios cereal and Progresso soup, dropped to the lowest price in more than two weeks, after providing a fiscal 2014 forecast that trailed Wall Street expectations as it anticipates higher costs for ingredients. The company's fourth quarter profit rose 13% on higher sales volumes, with both profit and sales topping analyst estimates.
Monsanto Co. (NYSE:MON), the world’s largest seed company, extended losses for a fifth day, losing 1.4% as it posted a 3% drop in fiscal third-quarter profit and provided a full-year forecast that trailed analysts’ projections.
In technology shares, Microsoft Corp. (NASDAQ:MSFT), the world’s largest software company, extended this year’s gains, adding 1.6% after Morgan Stanley upgraded its rating on the stock to "overweight." Microsoft will make the preview version of Windows 8.1 available for a free download as of Wednesday, on the 8-month anniversary of the original release of Windows 8.
In news abroad, Chinese markets were calmer today as inter-bank market rates dropped further, but the Shanghai Composite Index closed down 0.41% after the People's Bank of China said that it has provided liquidity to banks and that it will inject cash "based on the market's actual situation". The central bank also said it would maintain its prudent monetary policy, with the comments reflecting the bank's attempt to ease the credit crunch.
European markets closed higher, helped by the U.S. gains seen a day earlier and by the German consumer confidence report, which climbed to its highest level in almost six years, boosted by a strong labour market and significant wage hikes.
Gold futures were lately down by $44 an ounce to $1,231, and crude for July fell 76 cents to $94.56 a barrel.
European markets closed sharply higher today with shares in France leading the region. The CAC 40 settled up 1.94% while Germany's DAX added 1.74% and Britain's FTSE 100 gained 1.02%.