Friday Dow Rises On GDP News

Now at 9,185, up 30 points.

NEW YORK (AP) — Traders aren’t making big moves on the final day of a huge month for the stock market.
Investors reacted coolly to a report that the nation’s economy shrank at a slower pace than expected in the April-June quarter. Most stocks rose but major indexes seesawed in a tight range.
The nation’s gross domestic product, a measure of the economy’s total output, slowed at a rate of 1 percent during the quarter. That was better than the 1.5 percent drop expected by analysts. But the report also found that consumers cut spending in the second quarter, a troubling sign because their outlays account for more than two-thirds of all U.S. economic activity.
Investors have been placing big bets this month that the longest recession since World War II is finally beginning to recede. The Dow began Friday with a gain of 8.4 percent for the month, its strongest July since 1989, when it gained 9 percent. The blue chips are on track to post the best performance of any month since October 2002.
Alan Lancz, money manager at Alan B. Lancz & Associates, said the GDP report signaled the economy was improving, but he worries that investors are getting ahead of themselves and buying stocks as if the economy will rebound quickly off the bottom.
“The good news is it’s heading in the right direction and the bad news is the higher the market moves the more it’s discounting a V-shaped recovery,” he said.
In early afternoon trading, the Dow rose 11.86, or 0.1 percent, to 9,166.32. The Standard & Poor’s 500 index rose 0.65, or 0.1 percent, to 987.40, while the Nasdaq composite rose 2.56, or 0.1 percent, to 1,986.86.
The GDP report is the strongest sign yet that the recession is winding down. However, the Commerce Department revised the first-quarter GDP figure much lower, saying economic activity tumbled 6.4 percent. That is the worst quarterly reading in nearly 30 years.
The latest report also said consumers cut spending by 1.2 percent in the second quarter, after a 0.6 percent increase in the first quarter.
Investors have been looking to consumers to help lead the economy out of a recession. Spending has been cut as consumers continue to worry about jobs. The unemployment rate is expected to move higher after hitting a 26-year high of 9.5 percent in June.
“We’re still not in very good shape in the employment part,” said Steven Stahler, president of the Stahler Group in Baton Rouge, La., adding he doesn’t expect to see consumers leading the country of out recession soon.
In corporate news, Walt Disney Co. fell 98 cents, or 3.7 percent, to $25.24 after reporting a 26 percent drop in fiscal third-quarter profits on slower DVD sales while revenue fell by 7 percent.
In other trading, bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.52 percent from 3.61 percent late Thursday.
Light, sweet crude rose $1.11 to $68.05 a barrel on the New York Mercantile Exchange.
The dollar fell, and gold prices rose.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 506.4 million shares compared with 680.7 million shares traded at the same point Thursday.
The Russell 2000 index of smaller companies rose 1.45, or 0.3 percent, to 559.25.
Overseas, Japan’s Nikkei stock average rose 1.9 percent. In afternoon trading, Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index declined 0.6 percent, and France’s CAC-40 declined 0.5 percent.

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