US stocks end higher, shrugging off weak GDP data
Wall Street stocks rallied again Thursday, shrugging off a weak US GDP report that deepened recession talk but generated hopes among investors that the economic slowdown means the Federal Reserve will moderate its aggressive interest rate hikes. The Dow Jones finished one percent higher at 32,529, the S&P 500 climbed 1.2 percent to 4,072, and the Nasdaq tacked on 1.1 percent to 12,162. Stocks fell soon after the second-quarter data were released, showing US domestic product declined at an annual rate of 0.9 percent, following an even bigger drop in the first quarter. But markets pivoted later in the morning, betting that clear signs of economic weakness would prompt the Fed to ease off on steep increases in borrowing costs. The US central bank on Wednesday announced its second straight 75 basis point increase, and signaled it is prepared to do more. "The real catalyst ... is a belief that bad news (earnings disappointments and weak data) is good news (fewer rate hikes from the Fed)," Briefing.com said in an analysis. Analysts also pointed to improved investor sentiment that has enabled stocks to advance despite lackluster earnings because the results have not been as bad as feared. Also, many investors believe that even if there is a US recession, "any downturn that we are going through will likely be mild," said Jack Ablin, chief investment officer of Cresset Asset Management. But he added that it was still too soon to "declare victory" on inflation. Among individual stocks, Facebook-parent Meta Platform tumbled 5.2 percent after it posted its first quarterly revenue drop as the social media powerhouse battles a turbulent economy and competition from the rising phenomenon of TikTok. But Ford jumped 6.1 percent as the US auto giant reported increased second-quarter profits on a surge in auto sales that more than offset the hit from higher costs. (AFP)