Midday Update: Wall Street Dismisses Stale GDP Data, Regain Upward Momentum on Bargain-Hunting


Stocks Wednesday reversed early losses that followed a steep contraction in Q1 gross domestic product and an unexpected decline in durable goods orders, rebounding from yesterday's late-day sell-off. While GDP contracted by its largest amount since 2009, Wall Street recognized economic activity during the quarter was distorted by adverse weather conditions, temporarily stifling both production and consumer spending.

An big drop in healthcare spending magnified sluggish consumer spending and inventory accumulation, resulting in a downward revision to Q1 GDP to a 2.9% decline, exceeding estimates that had been looking for a revised 1.8% drop. The component measuring any inflationary pressure remained unchanged at +1.3%.

Durable goods orders was also distorted by one-off elements including a 25% drop in military orders, resulting in a 1.0% plunge in May durable goods orders versus the consensus estimate for a 0.4% gain. Excluding the 25% drop in defense orders, durable goods orders were up 0.6%, but fell a benign 0.1% excluding transportation orders.

The market also digested an impressive gain in the purchasing managers services index to 61.2 in June from 58.1 in May.

In other news, consumer staples are under pressure from missed earnings from General Mills ( GIS ), but broadcasting stocks like CBS Corp ( CBS ), Sinclair Broadcasting ( SBGI ) and Nexstar Broadcasting ( NXST ) are higher following the Supreme Court decision against online video streaming company Aereo regarding copyright violations.

European equities were unable to capitalize on the rebound on Wall Street with escalating tensions in Iraq and likely impact on global energy prices weighing on EU-zone markets. Geo-political pressures are luring investors to the government bond market despite last night's bullish data on Italian retail sales and German consumer confidence.

Crude oil was up $0.11 to $106.17 per barrel. Natural gas was up $0.01 to $4.55 per 1 million BTU. Gold was down $1.20 to $1,319.30 an ounce, while silver was up $0.04 to $21.14 an ounce. Copper was up $0.02 to $3.16 per pound.

Among energy ETFs, the United States Oil Fund was up $0.15% to $39.15 with the United States Natural Gas Fund was up 0.64% to $25.22. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 1.23% to 25.89 while SPDR Gold Shares were up 0.35% to $127.42. The iShares Silver Trust was up 1.04% to $20.29.

Here's where the markets stand at mid-day:

NYSE Composite Index up 14.19 (+0.13%) to 10,936.18

Dow Jones Industrial Average up 27.14 (+0.16%) to 16,845.27

S&P 500 up 4.41 (+0.23%) to 1,954.39

Nasdaq Composite Index up 10.98 (+0.25%) to 4,361.34


Nikkei 225 Index down 0.71%

Hang Seng Index down 0.06%

Shanghai China Composite Index down 0.41%

FTSE 100 Index down 0.79%

CAC 40 down 1.28%

DAX down 0.71%


NYSE Energy Sector Index up 1.75%

NYSE Financial Sector Index down 0.06%

NYSE Healthcare Sector Index up 0.56%


(+) AERI (+26.72%) Successful results of its Phase 2b trial for once-daily, quadruple-action Roclatan

(+) MDCI (+93.64%) To be bought by Owens & Minor for $13.80/share in cash

(+) ADPT (+20.45%) Trading higher after 4.9 million share IPO at $22

(+) ZU (+9.37%) Upgraded to Buy at Goldman, PT raised to $50

(+) POWR (+18.88%) Adjusted services requirements to "major utility customer"


(-) FIO (-2.72%) 14D-9 filing shows SanDisk ( SNDK ) is the only bidder

(-) MTLS (-3.00%) Shares fall after Tuesday's 8 million ADR offering at $12

(-) TISI (-1.85%) Missed on both Q4 earnings and revenue

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: GIS , CBS , SBGI , NXST , SNDK

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