Stocks recover as U.S. reports 2.5% GDP growth in 2nd quarter
Joblessness falls in July to 7.4 per cent
Wall Street recovered from its losses two days ago on Thursday, as the Commerce Depart reported the U.S. economy grew at a 2.5 per cent annual rate from April through June, much faster than previously estimated.
The U.S. also reported a decline in joblessness, with the number of people seeking U.S. unemployment benefits for July near the lowest level in more than five years.
Employers have added an average of 192,000 jobs a month since January, pushing the unemployment rate down to 7.4 percent in July from 7.6 per cent in June.
The steep revision in GDP growth was largely because U.S. companies exported more goods and imports declined. The improvement in the trade deficit helped offset weaker government spending.
Second-quarter growth was sharply higher than the initial 1.1 per cent rate from January through March.
U.S. stocks rose as investors weighed the positive economic news against worries about Syria.
The Dow Jones industrial average was up 78 points, or 0.5 per cent, to 14,902 as of noon Thursday.
The Standard and Poor's 500 index rose 10 points, or 0.7 per cent, to 1,645 and the Nasdaq composite rose 41 points, or 1.2 per cent, to 3,635.
After selling off sharply Tuesday over the threat on a U.S.-led military intervention in Syria, stocks have almost completely recovered their losses. Today the UN Security Council's permanent members failed to agree to a proposal to use force in the region, lessening worries about instability.
The faster-than-expected improvement in the economy and the growth of exports were particularly heartening.
However traders still are looking to next week, when the August jobs report will be released. If that report shows unemployment below 7 per cent, they are worried the Fed will taper its bond buyback scheme, probably in September.
Economists expect growth will stay at the 2.5 per cent rate in the second half of the year, helped by steady job gains and less drag from federal spending cuts. But some worry that increases in interest rates could slow the economy's momentum.
The U.S. Labor Department reported employers are reducing the number of layoffs, but few are hiring aggressively.
The four-week average for unemployment benefits inched up 750 people to 331,250 after reaching a 5 1/2-year low the previous week.