Wall St rises on upward GDP revision

NEW YORK: Wall Street stocks swung higher Thursday as the markets mulled a small upward revision in US economic output and mostly positive company earnings results. The Dow Jones Industrial Average rose 172.54 points (2.08 per cent) to 8,472.40, posting its first triple-digit gain since June 1.

The tech-dominant Nasdaq climbed 37.20 points (2.08 per cent) to 1,829.54 while the broad-market Standard & Poor’s 500 advanced 19.32 points (2.14 per cent) to 920.26.

Market action came after the government reported that the US economy contracted at a 5.5 percent pace in the first quarter, slightly better than the previous estimate of a 5.7 percent drop. Analysts said the report was consistent with other signals suggesting the worst slump in decades would soon be over.

“All the incoming data suggest that economic activity contracted at a much slower rate in the second quarter — 2.5 to 3.0 per cent — and that the trough of this cycle is likely to occur sometime in August or September,” said Nariman Behravesh at IHS Global Insight.

Behravesh said he “now expects the economy to be more or less flat in the third quarter and grow around 1.0 per cent in the fourth quarter.” The market also seemed to welcome a series of mostly better than expected company earnings results as well as strong demand in an auction of US$27 billion worth of new seven-year Treasury bonds.

The rising stocks stemmed from “improved investor sentiment toward consumer stocks after a string of positive earnings announcements,” said analysts at Charles Schwab & Co. “Better-than-expected earnings from retailer Bed Bath & Beyond and athletic shoe and clothing maker Nike, combined with positive outlooks from homebuilder Lennar and car rental group Hertz Global have all aided investor sentiment.”

But the positive tone was soured by government showing new claims for US unemployment benefits climbing for the second consecutive week last week. Initial claims for unemployment insurance benefits rose to a seasonally adjusted 627,000 in the week that ended June 20 from an upwardly revised 612,000 claims in the prior week, the Labor Department said. Most analysts had expected new claims of 600,000. -- AFP