Dow ends at record high as Fed upbeat on economy

NEW YORK Wed Apr 30, 2014 5:01pm EDT

Traders work on the floor of the New York Stock Exchange April 30, 2014. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange April 30, 2014.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - The Dow closed at its first record high of 2014 on Wednesday after the Federal Reserve gave an upbeat view of the economy's prospects as it announced another cut to its massive bond-buying program.

Investors brushed aside data showing weak first-quarter economic growth, which was tied to the severe winter that hampered exports and hit investment spending.

The Fed said in a statement it would reduce its monthly bond purchases to $45 billion from $55 billion, as expected. That will keep it on track to end the program as soon as October.

That the Fed looked past a dismal reading on first-quarter growth reinforced the view that weather was to blame for the weakness, analysts said.

"They are seeing some economic activity pick up after the slowdown during the winter," said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati. That "is one positive sign."

Nine of the 10 S&P 500 sectors ended in the black, led by the economically-sensitive S&P materials sector .SPLRCMA, up 0.8 percent. Exxon Mobil (XOM.N), up 0.9 percent at $102.41, led gains on the S&P 500.

The Dow Jones industrial average .DJI rose 45.47 points or 0.27 percent, to 16,580.84, a record high close. It was the first record close of the year for the Dow.

The S&P 500 .SPX gained 5.62 points or 0.3 percent, to 1,883.95 and the Nasdaq Composite .IXIC added 11.013 points or 0.27 percent, to 4,114.556.

For the month, the Dow and S&P 500 posted slight gains, while the Nasdaq dropped 2 percent following weeks of heavy selling in tech and biotech "momentum" stocks. The Dow was up 0.7 percent in April; the S&P 500 was up 0.6 percent.

Stocks were near steady for most of the session, then slowly edged to session highs following the Fed announcement.

EBay (EBAY.O) was among the biggest negative influences on both the S&P 500 and Nasdaq. Its shares fell 5 percent to $51.83, a day after it forecast lower-than-expected earnings this quarter.

Twitter (TWTR.N) shares fell 8.6 percent to $38.97 and hit a record intraday low of $37.25, a day after posting lackluster user and usage growth.

Early in the session, data showed gross domestic product expanded at a 0.1 percent annual rate in the first quarter, the slowest since the fourth quarter of 2012, as exports and inventories weighed, but activity already appears to be bouncing back.

In another report, however, U.S. private employers beat expectations by adding 220,000 workers in April, the most since November, and gains in the prior month were revised up.

After the bell, shares of Yelp Inc (YELP.N), the operator of consumer review website Yelp.com, rose 4 percent to $60.67 as it reported a 66 percent rise in quarterly revenue.

About 6.8 billion shares changed hands on U.S. exchanges, above the 6.6 billion April average, according to data from BATS Global Markets.

(Editing by Bernadette Baum and Nick Zieminski)

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Comments (4)
KJackb wrote:
GDP probably grew at a 1.2 percent annual rate, according to a Reuters survey of economists, pulling back from the fourth quarter’s 2.6 percent pace.

It is never as simple as it seems, particularly with the obama admin, but here’s the “bait & switch.” Announce the growth rate in terms of annual growth (as in reporting .3 percent growth in Q1) doesn’t sound as “strong” as reporting a 1.2 percent annual increase. Then, they “close the door” on the discussion by referring to a “pullback” from Q$13 growth, again on annual basis, making it sound as if our final 2013 annual GDP rate of 1.87 percent was “special.”

People, we are so close to re-entering a recession (if we haven’t technically done so already) it is scary. Finger(s) in the dike analogy applies here.

Apr 30, 2014 8:37am EDT  --  Report as abuse
Simplerman wrote:
Haven’t seen this many For Sale signs since 2007.

They’re now turning to For Rent signs. Can you see the signs?

Recession is upon us. The Obama Transformation is almost complete.

Watch out!!

Apr 30, 2014 12:04pm EDT  --  Report as abuse
Kahnie wrote:
“the economy grew at a sharply lower-than. . .” Who writes these leads? Sheesh.

Apr 30, 2014 12:59pm EDT  --  Report as abuse
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