Wall Street edges higher despite weak GDP report
NEW YORK - U.S. stocks edged higher on Wednesday as investors continued to find value in equities over other asset classes despite the latest economic data coming in below expectations.
The U.S. economy contracted 2.9 percent in the first quarter, a much steeper pace than previously estimated, though activity was impacted by harsh winter weather and there are indications that growth has since rebounded. In another negative data point, orders for durable goods unexpectedly fell 1 percent in May.
Futures initially fell on the news but Wall Street showed signs of strength in early trading. The S&P 500 and Dow remain within striking distance of record levels.
"As long as investors believe the economy will keep growing, and everyone expects growth in the second quarter, the lesser evil will be to buy equities at a modestly higher valuation, since bonds and cash don't represent better values," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
The Dow Jones industrial average rose 35.07 points or 0.21 percent, to 16,853.2, the S&P 500 gained 3.25 points or 0.17 percent, to 1,953.23 and the Nasdaq Composite added 8.23 points or 0.19 percent, to 4,358.59.
The S&P 500 had hit an intraday record on Tuesday before concerns over Iraq turned indexes sharply lower in afternoon trading. Those tensions remained in focus after militants in Iraq attacked one of the country's largest air bases. The first U.S. teams arrived to assess Iraqi security forces and decide how to help counter the violence.
Investors are concerned about the impact prolonged turmoil in Iraq could have on oil prices, which are already up 3.8 percent this month.
U.S. crude futures fell 0.3 percent to $105.71 per barrel in early trading, erasing earlier gains. Analysts have speculated that prices above $115 per barrel for an extended period would weigh on economic activity.
Monsanto Co rose 5.3 percent to $126.99 after it raised the low end of its outlook, while General Mills Inc fell 3.3 percent to $51.95 as its fourth-quarter earnings missed expectations.
Barnes & Noble Inc popped 10 percent to $22.61. The book retailer said it would spin off its Nook tablets and college books business. It also reported a quarterly loss that narrowed from the prior year.
Medical Action Industries jumped 94 percent to $13.71 on its heaviest ever one-day volume after Owens & Minor Inc agreed to buy the company for about $208 million. Owens rose 1.2 percent to $35.28.
Bristol-Myers Squibb Co rose 3.1 percent to $49.81 a day after saying said a late-stage trial testing its immunotherapy nivolumab in advanced melanoma patients was halted early after it was determined that the drug was likely to prolong survival.