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S and P hits new record despite US GDP

Thursday, May 29 15:18:54

U.S. stocks rose at the open today on expectations of strong growth in the second quarter, even as data showed the world's largest economy contracted in the first quarter.

Supporting the push to a fresh record high on the S and P 500, the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a strengthening labour market.

"Personal consumption was actually revised up, it was a big number and it held," said Phil Orlando, chief equity market strategist at Federated Investors in New York, speaking of the internals of the GDP data.

"This gives me greater confidence that we're looking at 3 handles on GDP for the rest of the year."

The Dow Jones industrial average rose 22.41 points, or 0.13 percent, to 16,655.59; the S and P 500 gained 3.67 points, or 0.19 percent, to 1,913.45, and the Nasdaq Composite added 10.27 points, or 0.24 percent, to 4,235.35.

The U.S. 10-year note yield ticked up after the data but was still near its lowest in 11 months, pressured by expectations of further easing from the European Central Bank next week. Low yields could continue to entice investors into dividend-paying stocks, with the high-yielding utilities sector widely outperforming the S&P 500 benchmark so far this year.

"Lower yields have nothing to do with the domestic economy but the anticipation of the ECB pulling the trigger next week," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

He said bonds are also a "safety bet after the European elections, as the periphery voted against austerity, so the fear might be that eventually those economies could get themselves into more trouble."

Hillshire Brands shares soared 15.5 percent to $51.75 after Tyson Foods offered to top a bid from Pilgrim's Pride. Tyson shares rose 5.8 percent to $43.10 and Pilgrim's Pride fell 2.9 percent to $24.65.

Shares of cybersecurity software maker Palo Alto Networks jumped 9.7 percent to $76.27 a day after it reported better-than-expected quarterly revenue as it added more customers, and said it settled patent litigation with network gear maker Juniper Networks.

Apple shares rose 0.9 percent to $629.50 after hitting its highest in a year and a half a day after announcing it will buy music streaming and audio equipment company Beats for about $3 billion and bring its founders, recording mogul Jimmy Iovine and rapper Dr. Dre, into Apple's ranks. (Reuters)