* Below-forecast GDP read eases stimulus concerns
* Mining stocks under pressure as gold tumbles
* Adobe and Microsoft rise on analyst upgrades
* Indexes up: Dow 0.5 pct, S&P 0.6 pct, Nasdaq 0.6 pct
By Ryan Vlastelica
NEW YORK, June 26 U.S. stocks advanced for a
second straight day on Wednesday as a broad measure of economic
growth was revised down, easing investors' concerns that the
Federal Reserve would begin to withdraw its stimulus early.
The economy grew 1.8 percent in the first quarter, according
to the Commerce Department's final estimate of gross domestic
product. That was well below expectations for 2.4 percent
While the data is backward-looking and includes the start of
cutbacks in federal spending, analysts said it could influence
the Fed as it considers whether the economy is strong enough for
it to begin scaling back its bond-buying.
The effect of the GDP report "is that despite all the
rhetoric and fear about tapering, this will keep the Fed firmly
planted in stimulus, which is a positive for the market," said
Michael Mullaney, chief investment officer at Fiduciary Trust Co
Markets have been closely tethered to the central bank's
bond-buying program, advancing to a series of record highs as
investors bet it would remain in place, and then dropping
dramatically on hints the bond buying could be scaled back.
The S&P 500 is down about 3 percent since June 19 when the
Fed signaled it may begin to scale back its stimulus efforts
should its economic forecasts hold. That litmus test has created
a paradox for the market: strong data favors the Fed scaling
back, but removing the stimulus could adversely affect future
The weak GDP report "is another example of bad news being
good news," said Mullaney, who helps oversee $9.5 billion.
The Dow Jones industrial average was up 79.37 points,
or 0.54 percent, at 14,839.68. The Standard & Poor's 500 Index
was up 8.69 points, or 0.55 percent, at 1,596.72. The
Nasdaq Composite Index was up 19.67 points, or 0.59
percent, at 3,367.56.
The S&P has gained 1.8 percent over the past two sessions,
its best two-day rally in three weeks. But prior to the current
rally, Fed concerns sparked a massive sell-off. The S&P 500
index last week posted its worst week since April.
Tuesday's rally came after the People's Bank of China eased
concerns about a possible banking crisis in the world's
second-largest economy. Data on durable goods, new home sales
and consumer confidence also added to the positive tone.
Tech companies advanced following bullish analyst
commentary. Adobe Systems Inc rose 2.7 percent to
$45.56 after Jefferies & Co upgraded the stock to "buy" from
"hold," citing expectations for more new users, while Microsoft
Corp climbed 1.6 percent to $34.21 after Morgan Stanley
raised its rating on the software company to "overweight."
On the downside, gold stocks were under pressure as the
precious metal fell to its lowest in almost three years, putting
it on course for a record quarterly loss. Material stocks
were the weakest of the day, falling 0.3 percent.
U.S.-listed shares of Gold Fields Ltd dropped 5.5
percent to $4.80 and Barrick Gold Corp lost 6.3 percent
to $15.10. Newmont Mining was one of the biggest
decliners on the S&P 500, losing 4.9 percent to $27.51. The
NYSEArca gold bug index, comprising a basket of unhedged
gold stocks, declined 4.3 percent.
Apollo Group, owner of the University of Phoenix,
was the biggest decliner on the S&P, shedding 8 percent to
$17.83 a day after reporting its third-quarter results.
Monsanto Co fell 0.3 percent to $101.09 after the
seed company posted a drop in quarterly profits.
General Mills slipped 0.6 percent to $48.05 after
giving a forecast for the new fiscal year that fell shy of
expectations, even as its quarterly profit was in line with
As the market nears the end of the second quarter, equities
may also receive a boost from "window dressing," the practice of
fund managers selling underperforming stocks and buying better
performing shares to enhance the appearance of their portfolios.