Daily Data Flow: Stocks End Higher on Stimulus Optimism; Economy Expands Less than Expected; Dollar Falls

Daily Data Flow

Stocks Finish Higher Amid Optimism for Stimulus (CNBC)

Though stocks shaved their gains in the final hour of trading today, they still ended modestly higher with the DOW recovering from its worst one-day drop in nearly four weeks, as the latest round of weak economic data suggests the Fed’s bond-buying program would remain intact. “After some early hesitation, the market got in gear on the upside with leadership from the semiconductors and financials, the kind of leadership you like to see if you are a bull,” he said. “[Meanwhile,] in the last few days, many defensive names have come under pressure as money flowed out of them into cyclicals. The catalyst was the 10-year yield staying over 2 percent and the perception that the economy was getting stronger.”

Economy Grows at 2.4% Rate, Less Than First Estimated (Bloomberg)

The economy expanded less than previously estimated this first quarter as slower inventory building and cutbacks in government spending overshadowed the biggest gain in consumer purchases since 2010. However, strong consumer spending, further housing market progress and jobs gains will allow Americans to sustain their finances as the fallout from federal budget cuts subsides. “The economic outlook is still favorable,” said Millan Mulraine, an economist at TD Securities USA LLC in New York, who correctly forecast GDP. “It’s still fairly robust growth driven by consumer spending. We expect an acceleration in the second half as the economy moves beyond the current soft patch.”

Dollar Falls on Weak Economic Data, Stimulus Tapering Questionable (Reuters)

The dollar fell to a three-week low against the euro on weak economic data, which has dampened expectations that the Federal Reserve will reduce its monetary stimulus soon. Further, analysts have suggested that weaker data could reinforce expectations that the Fed needs a lot of monetary stimulus, but Fed Chairman Ben Bernanke has recently argued that the stimulus needs to be tapered down. “We need two things, according to Bernanke, to consider tapering. That is, we need stronger data and we need more confidence of sustained improvement. And today’s data simply does not support that conclusion,” said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

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