(Source: Business Week)
Stocks rallied in the last hour of trading Wednesday after fluctuating for most of the session. The Federal Reserve's Beige Book indicated the economy contracted in April, but 5 of the 12 districts said the slump moderated.
Investors were disappointed with the uncertain earnings outlook from Intel (INTC). This morning, Wal-Mart's (WMT) CEO said the economy was still under stress and he foresaw no quick fix. The latest mixed bag of earnings reports and economic data were giving no clear pictures, notes S&P MarketScope.
After rocking back and forth on Wednesday, the 30-stock Dow Jones industrial average finished with a gain of 109.44 points, or 1.38%, to 8,029.62. The broad S&P 500 index moved up 10.56 points, or 1.25%, to 852.06. The tech-heavy Nasdaq composite index added 1.08 points, or 0.07%, to 1,626.80, held back by weakness in tech stocks.
Treasuries were mixed. The dollar index was up, and gold futures were flat. Crude oil futures were lower after inventory data.
The Fed's Beige Book revealed some of Bernanke's "green shoots" but was still generally quite gloomy, reiterating that "overall economic activity contracted further or remained weak," notes Action Economics. For good news, "five of twelve Districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
Manufacturing activity was said to have "weakened across a broad range of industries in most Districts," but manufacturers' assessments of future factory activity improved marginally. Consumer spending "remained generally weak," yet some Districts said that "sales rose slightly or declines moderated". For housing, "markets remained depressed overall, but there were some signs that conditions may be stabilizing," and for lending, "most Districts reported weaker loan demand overall." Prices were said to be experiencing continued downward pressures.
"Overall, the book remains bleak, but considerably less so than prior Beige Book updates since September," says Action Economics.
In other economic news, the consumer price index [CPI] dipped 0.1% in March, while the core rate [excluding energy and food] edged up 0.2% after February gains of 0.4% and 0.2%, respectively. Markets expected a 0.1% gain in both readings. Energy prices fell 3.0%, almost offsetting the 3.3% gain in February. Gasoline prices fell 4.0%. Transportation costs declined 1.1%, while food and beverage prices edged down 0.1%. Apparel prices dipped 0.2%. Housing costs declined 0.1%, with the homeowners' equivalent rent measure up 0.2%.
