US stocks rally as Q2 growth estimate hiked

POSTED ON 08/30/2013 10:31 AM

STOCKS UP. The Dow Jones rises following an upgrade to the 2nd-quarter GDP growth of the US. Photo by AFP

STOCKS UP. The Dow Jones rises following an upgrade to the 2nd-quarter GDP growth of the US. Photo by AFP

NEW YORK CITY, United States – US stocks Thursday (Friday, August 30 in Manila) closed higher following an upgrade to US 2nd-quarter economic growth and a shift in expectations away from an immediate military strike on Syria.

The Dow Jones Industrial Average rose 16.44 (0.11%) to 14,840.95.

The broad-based S&P 500 added 3.21 (0.2%) at 1,638.17, while the tech-rich Nasdaq Composite Index increased 26.95 (0.75%) to 3,620.30.

US economic growth in the second quarter came in at an annual rate of 2.5%, faster than the original estimate of 1.7%, the Commerce Department said.

Stronger consumer spending and exports underpinned the pickup from the first quarter’s sluggish 1.1% pace, while imports grew more slowly than originally estimated, the department said.

In addition, market watchers have been calmed by an apparent shift from the US and other western powers in the timing of any military strike against Syria in response to its alleged chemical warfare attack on its people.

“There just seems to be less urgency about an attack any time soon,” said Alec Young, global equity strategist for S&P Capital IQ. “The stress level has come down a little.”

Dow component Verizon rose 2.7% after British telecommunications giant Vodafone said it is in talks regarding a possible sale of its stake in Verizon. The stake is said to be worth more than $100 billion. Vodafone’s US-traded shares rose 8.1%.

Oil giants Exxon Mobil and Chevron, both components of the Dow, fell 1.8% and 1.2% as oil prices retreated on diminished Syria anxiety.

Microsoft, another Dow component, gained 1.6% on reports that the tech giant is considering a strategic investment in Foursquare, which provides recommendations on restaurants and other services by geographic area.

Fashion house Guess surged 12.9% after forecasting full-year earnings in the range of $1.78-$1.92 a share, whereas analysts currently project earnings of $1.80. Results in North America were strong, but Southern Europe remains “challenging” and the company is “beginning to see a slowdown in China,” it said.

Bond prices rose. The yield on the 10-year Treasury bond fell to 2.75% from 2.78% late Wednesday, while the 30-year dropped to 3.7% from 3.75%. Prices and yields move inversely. –