NEW YORK (CNNMoney.com) -- Stocks rallied Friday as investors focused on a slightly better-than-expected revision of second-quarter GDP, though trading was choppy following cautious comments from Fed Chairman Ben Bernanke and a sales warning from Intel.
Dow Jones industrial average (INDU) gained 113 points, or 1.1%, the S&P 500 (SPX)jumped 11 points, or 1%, and the Nasdaq (COMP) composite rose 20 points, or 1%.
"What's bad turned out to be good for the market in this case," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "Even though GDP was down from the preliminary number, we caught a little breathing room since the expectations were so low."
Economists had expected the second-quarter gross domestic product to be revised down to 1.4% from 2.4%. The actual revision came in at 1.6%.
Stocks tumbled briefly after chipmaker Intel said its third-quarter revenue would come in lower than it previously forecast, unnerving already frazzled investors.
"Intel coming out revising its revenue to the lower end of the lower end of its range only further exacerbates the fears that the economy's growth is stalling," he added.
Stocks were unable to hold early gains Thursday despite a better-than-expected report on initial claims for unemployment benefits. Investors have been nervous this week about the economic outlook, following two disappointing reports on the housing market.
Economy: At an annual meeting of central bankers in Jackson Hole, Wyo., Fed Chairman Ben Bernanke said the economic recovery is "less vigorous" than expected but emphasized that the Federal Reserve will be able to support growth.
"The disappointment with Bernanke's speech is that it seems no action is imminent," said Luschini. "The Fed is saying we have the tools on hand, but we're not pulling the gun out of the holster today, which investors take to mean that we're going to stay in this economic slowdown."
Separately, the Reuters/University of Michigan index of consumer sentiment for August rose to 68.9 from 67.8 in July. The figure bounced off an eight-month low but just missed economists' forecasts.
Companies: Intel (INTC, Fortune 500) issued a revenue warning, saying that its third-quarter sales will fall below the company's previous expectations. Shares, which were halted for 15 minutes Friday, gained more than 1% after they resumed trading.
The bidding war for 3PAR (PAR) continued Friday, as Dell (DELL, Fortune 500) increased its offer for the storage company to match HP's (HPQ,Fortune 500) bid made Thursday, at $27 per share. 3PAR accepted Dell's offer, but HP upped its bid again directly before the market open Friday, topping Dell's offer latest offer.
Shares of 3PAR jumped 20% in early trading, while Dell's stock rose 1.2%. Shares of HP edged lower.
World markets: European shares were mixed. The CAC 40 in France lost 0.05%, Britain's FTSE 100 rose 0.3% and the DAX in Germany shed 0.02%.
Asian markets ended mixed. Japan's benchmark Nikkei index added 1.7%, and the Shanghai Composite rose 0.3%. The Hang Seng in Hong Kong fell 0.3%.
Currencies and commodities: The dollar rose against the euro, the British pound, and the Japanese yen.
Oil futures for October delivery slipped 19 cent to $73.17 a barrel. Gold for December delivery gained $2.60 to $1,240.30 an ounce.
Bonds: The yield on the 10-year Treasury note rose to 2.59% from 2.50% late Thursday.
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