Wall Street shares close at highs after stronger-than-expected Q1 GDP data
NEW YORK (AFX) - Share prices on the DJIA closed at their highest levels of the session, and the Nasdaq composite closed off its highs, after stronger-than-expected first-quarter GDP data report counteracted rampant speculation that the U.S. economy is poised for a recession, dealers said. The DJIA closed up 117.70 at 10,810.0, its highest level for the week and day. The S&P 500 finished up 18.55 at 1,253.07 and the Nasdaq composite up 40.086 points at 2,075.74. Breadth on the NYSE was positive with 2,126 gaining stocks outnumbering 1,081 declining shares. Dealers said both the DJIA and Nasdaq composite opened higher and continued their advances throughout the session. They noted positive response to early morning data showing that in the first quarter, U.S. GDP grew at a pace of 2.0 pct, compared with expectations for growth of just 0.8 pct. Dealers said the GDP report triggered some buy programs early in the session, setting a strong momentum that continued throughout the day. They noted that the acceleration in growth was led by consumer spending, further fuelling hopes that confidence is being restored after several shaky months, which should further support economic recovery. However, Standard & Poor's equities analyst David Wyss said: "The stronger first-quarter real GDP of 2.0 pct suggests the Federal Reserve may be more cautious in cutting interest rates." Wyss said that today's strong new report will place extra weight on next Friday's monthly employment report from the U.S. Labor Department in the Fed's near-term thinking on rates policy. "Next Friday's employment report will probably (help the Fed) decide between a 25- and 50-basis points rate cut." "At this point we think the recent weak Consumer Confidence reports will push the Fed toward another 50-point cur, but if the strong GDP is confirmed by a good employment report, the Fed will only cut rates by 25 points this time and will re-evaluate in June," Wyss said. Technology, financial and retail stocks led the advance on expectations all three sectors will benefit from a firmer economy, dealers said. Intel closed up 1.54 usd at 30.18 after the chip giant told analysts yesterday that it is sticking to its capital spending and research and development plans, dealers said. Chief executive Craig Barrett also said he expects the chip industry to bottom in the second half, dealers said. Lucent shares finished up 29 cents, or 2.8 pct, at 10.83 and Alcatel ADRs up 1.11 usd at 30.96 after the Wall Street Journal reported that the two have held talks on a full merger. IBM finished up 2.52 usd at 116.20, Applied Materials was up 3.05 at 53.89 and Motorla up 89 cents at 15.49. Corning shares closed down 25 cents, or 1.2 pct, at 20.75 after the company yesterday reported first-quarter earnings of 29 cents, a penny above the consensus estimate, but slashed future sales and earnings estimates. The company also said it will have cut a total of 4,300 jobs by the end of the month. Amgen shares closed up 3.99 usd 59.88 after the company exceeded earnings estimates by a penny ,but warned that EPS growth will likely remain in the low-double digits in 2001 due to a delay in the approval of its Aranesp anemia treatment. Celera, which earlier said it has completed the sequencing of the mouse genome, finished up 2.59 at 37.99 and Biogen up 2.40 at 64.94. Financials stocks closed higher, benefiting from the general optimistic tone in the market today, with Morgan Stanley ending up 2.44 at 65.30, Lehman Brothers up 2.35 at 74.20 and Goldman Sachs up 45 cents to 92.94. Auto stocks closed mixed after the sector was downgraded to 'market perform' from 'marketoutperform' by Goldman Sachs analysts, on concerns about the slowdown in sales. GM shares finished down 35 cents at 55.05, Ford up 41 cents at 29.61 and . DaimlerChrysler down 62 cents at 49.28 usd.
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