Posted on: Friday, May 27, 2005
3.5% economic growth good news for Wall St.
By Michael J. Martinez
Associated Press
NEW YORK — Stocks rose yesterday as encouraging signs of economic growth eased investors' fears of a business slowdown.
Investors welcomed the report as a sign that the economy was still expanding and inflation risks had lessened.
The news also helped minimize the impact of this week's rise in oil prices, given that energy costs had not dampened first-quarter gross domestic product to a great degree. A barrel of light crude settled at $51.01, up 3 cents, on the New York Mercantile Exchange."
Bonds edged higher after the previous session's selloff. The yield on the 10-year Treasury note fell to 4.08 percent from 4.09 percent late Wednesday.
The dollar rose to a new 2005 high against the euro as pessimism over the new European constitution weighed on the 12-nation currency, and the dollar rose against most other currencies as well. Gold prices fell.
Analysts said the GDP report could keep the market from suffering another slump, as it did in April when the Dow nearly fell through 10,000. The economy appears to have achieved
a balance between economic growth and inflation that makes it likely the Federal Reserve will continue with its plan to raise interest rates gradually.
Advancing issues outnumbered decliners by nearly 9 to 4 on the New York Stock Exchange, where consolidated volume came to 1.77 billion shares, compared with 1.82 billion traded on Wednesday.
The Commerce Department reported that the economy grew by 3.5 percent in the first quarter of the year — up from a 3.1 percent estimate last month and just slightly less than the 3.6 percent economists had expected.
