Stocks higher on GDP, oil news
Stocks extended their gains into a second day Wednesday as investors digested a jump in the second-quarter gross domestic product while keeping a close eye on falling oil prices. The tech-dominated Nasdaq composite index posted an especially robust advance.
Investors saw the Commerce Department report, which said the nation’s GDP grew 3.3 percent from April to June, as fairly good news, with a few caveats. While the GDP figure was revised upward from a previous estimate of 2.8 percent, it still marked the slowest period of economic growth since the first quarter of 2003.
Consumer spending, however, grew at an annual rate of just 1.6 percent in the second quarter, the lowest level in three years. Economists fear uncomfortably high crude prices, which topped $50 per barrel Tuesday, could further hamper consumer spending.
“The economy seems to be on a decent growth path, but it’s being held back by high energy prices, and that’s likely to keep the stock market in this trading range that we’ve been in over the past eight or nine months now,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “For an upside breakout, we’ll need a steady decline in oil prices. For a downside breakout, any number of things are possible, including an actual oil shortage, which we thankfully don’t have right now.”
The Dow Jones industrial average finished up 58.84, or 0.6 percent, at 10,136.24, adding to an 88-point gain Tuesday. The Standard & Poor’s 500 index rose 4.74, or 0.4 percent, to 1,114.80.
The Nasdaq surged 24.07, or 1.3 percent, to 1,893.94, partly on enthusiasm over the potential acquisition of travel site Orbitz Inc. Buying in the chip sector, oversold after weeks of downgrades and third-quarter warnings, also buoyed tech shares. The Philadelphia Semiconductor index was up 1.9 percent.
“Basically we’re seeing some quarter-end bargain hunting for semiconductors after an abysmal performance on the quarter for tech stocks in general,” said David Hegarty, head trader at Commerzbank Securities “I’m a little bit cautious, but I remain positive going into the end of the year.”
Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange. Preliminary volume came to 1.4 billion shares, compared with 1.39 traded during Tuesday’s session.
The Russell 2000 index of smaller companies closed up 5.41, or 1 percent, at 571.07.
Overseas, Japan’s Nikkei stock average fell 0.3 percent. In Europe, France’s CAC-40 closed up 0.4 percent, Britain’s FTSE 100 gained 0.5 percent and Germany’s DAX index climbed 1 percent.