Stocks rally on strong GDP growth

By David Russell,

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Stocks are accelerating higher after second-quarter economic growth beat expectations.

S&P 500 futures were up about up 0.2 percent before the report but are now higher by more than 0.4 percent. The Nasdaq rose more than 0.6 percent. Europe was fractionally lower and Asia was little-changed overnight.

The Commerce Department's preliminary estimate of gross domestic product between April and June showed an increase of 4 percent, better than the 3.2 percent gain forecast by economists. That marks a major change in tone from the first quarter, when the figure lagged estimates by a wide margin.

ADP also announced that private-sector employers added 218,000 jobs this month, slightly better than the 215,000 consensus number. Today's third major event comes at 2 p.m. ET, when the Federal Reserve announces monetary policy.

The S&P 500 has been consolidating for most of the month after breaking out to new all-time highs in late-May and June. Transportation stocks and the Nasdaq have been the stronger segments in the market, while domestic-focused small caps have lagged. Emerging markets, basic metals and European banks have also returned to favor as investors embrace a global-growth theme. (See our researchLAB market scanner for a more complete market analysis.)

In company-specific news, social-media stock Twitter is exploding higher after earnings and revenue beat expectations. Guidance was also strong and shares are indicated up 27 percent in early trading. Amgen rose 4 percent and medical-device company Zeltiq popped 25 percent, both on strong results. U.S. Steel rose 10 percent after reporting an unexpected profit and a smaller-than-forecast revenue drop. Hess gained 4 percent after surpassing consensus and announcing it would spin off its pipeline assets.

More earnings scheduled this afternoon include Akamai Technologies, Lam Research, Kraft Foods, and Western Digital. The agenda includes two major economic events again on Friday: non-farm payrolls and the Institute for Supply Management's manufacturing index.

There are no big movers in commodity or currency markets, but that could change with today's big economic events. The Japanese yen is down slightly, a potential reflection of risk appetite.

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

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This article appears in: Investing Options
Referenced Stocks: SPX

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