NEW YORK: Wall Street stocks finished the week on a positive note after a bruising two-day retreat following a dismal US economic growth report.
Friday’s rally limited the losses, with the Dow Jones Industrial Average finally dipping 56.08 points(0.31 percent for the week to 18,024.06 and the broad-based S&P 500 shedding 9.40 (0.44 percent) to 2,108.29.
The decline in the Nasdaq was deeper, with the tech-rich index dropping 86.69 (1.70 percent) to 5,005.39
In a week packed with major earnings, economic reports and a Federal Reserve meeting, the most impactful news was Wednesday’s stunner that the US economy grew just 0.2 percent in the first quarter.
The dismal gross domestic product figure, reflecting in part the drag from exceptionally cold winter weather and the West Coast port strike, prompted soul-searching on Wall Street.
“What a disappointment to think the US economy barely grew at all in the first quarter with the fed funds rate at the zero bound for more than six years now,” said Briefing.com analyst Patrick O’Hare.
The GDP report was followed later Wednesday by a Fed policy statement that said the slower growth was due “in part” to transitory factors and that the economy should resume expanding at a “moderate pace.”
The communique suggested the Fed still expects to begin a slow series of rate rises in the coming months, though probably not as soon as June.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said the market “had a little tough time processing” the GDP data. But after two days, investors shrugged off their fears.
“The market is feeling better that the Fed’s not going to do too much here and that the economy is going to move forward at a modest pace,” he said.
Other data last week was mixed. The Conference Board’s index of consumer confidence fell sharply to 95.2 in April from 101.4 in March.
Other reports showed a modest rise in consumer spending in March and sluggish growth in manufacturing activity in April. US auto sales picked up in April.
Earnings generally solid
Companies have generally bested what were very low expectations ahead of first-quarter earnings season.
Of the 347 companies in the S&P 500 that have reported, 238 have reported earnings ahead of expectations, while 76 have missed, with the rest coming in at levels forecast by analysts. Only 45 percent have beaten expectations for revenues, according to S&P Capital IQ.
Standouts this week included drug giant Merck (+3.9 percent this week), which raised its full-year forecast after adjusted earnings per share in the first quarter came in at 85 cents, 11 cents above forecasts.
The market also a cheered a sunny report from online travel site Expedia, which reported a 19 percent increase in gross bookings and a 14 percent gain in revenue, lifting the stock 7.9 percent Friday.