Stocks Move Slightly Higher on GDP Growth


Stocks are moving tepidly higher in afternoon trading on mildly bullish economic data. The Dow Jones Industrial Average (INDEX: ^DJI) is up 0.25% with a half-hour left in trading, and the S&P 500 (INDEX: ^GSPC) has gained 0.14%.

So what's the big news of the day? Third-quarter GDP growth jumped to a whopping 2%. Bust out the champagne -- the economy is going gangbusters!

OK, things aren't that good, but the numbers were an improvement. GDP growth was up from 1.3% in the second quarter and higher than the 1.7% economists expected. An improved housing sector and government spending (bring out the boo birds) drove last quarter's growth. The problem is that investment by business fell to the lowest level in three years. The looming fiscal cliff has businesses tucking away their wallets, and until it's resolved, the shackles of slow growth remain on the economy.

Intel (NAS: INTC) has risen 1.2% on the day Microsoft (NAS: MSFT) announces Windows 8, the biggest update to its OS since Windows 95. The two companies are tied at the hip, and both have been hurt by weak PC sales this year. Investors are hoping Windows will kick the sector back into gear.

Verizon (NYS: VZ) jumped 1.2% after competitor Sprint (NYS: S) said it lost subscribers in the third quarter. Sprint is still playing catch-up in the 4G market, and it appears customers are willing to pay more for Verizon's superior network.

Aluminum maker Alcoa (NYS: AA) led the losers on the Dow, falling 0.8%. There wasn't significant news, but aluminum prices were falling, and Alcoa found itself dragged down with them.

An eye on the big picture
With economic growth stronger than expected ahead of the fiscal cliff, we could be in for a boom if Washington prevents us from going off the cliff. Business spending would pick up, and the economy could boom. To learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy, check out The Motley Fool's special free report: "3 ETFs Set to Soar During the Recovery." Just click here to access it now.

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Fool contributor Travis Hoium owns shares of Intel and Microsoft. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool owns shares of Intel and Microsoft. Motley Fool newsletter services recommend Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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