Markets Cheer Economic Weakness, Dow Up 149 Points
Yes, you read the headline correctly. Revised GDP numbers for the first quarter were released today, and, long story short, they were abysmal. The economy grew at just a 1.8% annualized pace, significantly lower than the already-unimpressive 2.4% rate of initial estimates. Normally, Wall Street would cringe at these numbers, but today it applauded them, figuring it could mean Fed tapering isn't as imminent as previously thought. The Dow Jones Industrial Average rallied 149 points, or 1%, to close at 14,910, its third straight day of triple-digit swings.
Aerospace giant Boeing was the top gainer in the Dow, adding 2.1% Wednesday. Boeing is already flying high after Ryanair announced its intention this month to buy more than $15 billion worth of the company's airplanes. The news today that Australia's major airline QantasLink plans to lease five additional twinjets from Boeing further evinces the company's string of recent successes.
Microsoft ended as another big winner today, gaining 2% after CEO Steve Ballmer addressed a crowd at the company's developer's conference in California. The highlight of the address was the news that Microsoft will be revamping the unpopular Windows 8 interface, notably by bringing back the "Start" button, which the company did away with initially. Windows 8.1 will also be able to run more applications simultaneously than Windows 8 was able to support.
Construction and mining machinery provider Caterpillar saw shares slip 0.3% as the price of precious metals slumped. Gold fell to 34-month lows, continuing its remarkable slide, which has seen the famed material shed nearly a quarter of its value in the last quarter of the year alone. With precious metals prices on the decline, demand for mining products like those Caterpillar produces is also in jeopardy.
Lastly, Alcoa shares were the biggest laggards in the blue-chip index, falling 2.2%. Obviously, today wasn't the best day to be an aluminum producer, as the basic materials sector ended as the worst-performing area of the market. Until commodities start to rebound or inflation starts to rise, Alcoa investors may be in for an unpleasant ride.
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