2 Stocks Leading the Dow Higher

The Dow Jones Industrial Average continues its rebound after first-quarter U.S. GDP was revised downward. As of 1:15 p.m. EDT the Dow is up 128 points, or 0.87%, to 14,888. The S&P 500 is up 0.88% to 1,602.

Today's only U.S. economic release was the second and final revision to Q1 GDP. The Department of Commerce reported that GDP grew just 1.8% in the first quarter, down from a previous estimate of 2.4%.

US Real GDP Growth Chart

US Real GDP Growth data by YCharts.

Perversely, this seems to be a positive for the market, as investors believe a weaker-than-expected economy will lead the Federal Reserve to continue its asset purchases for longer than anticipated. Last week, Fed Chairman Ben Bernanke sent the markets tumbling after he said that the economy is strengthening and that the Fed could begin tapering its asset purchases as soon as the end of the year. The market did not believe the economy was as strong as the Fed seemed to think, and today's GDP report gives some credence to that view.

Currently, the Federal Reserve is buying $85 billion worth of long-term assets each month in an effort to hold down rates and spur the economy. The Fed has said it will continue the asset purchases until inflation hits 2% to 2.5%, unemployment falls to 6.5%, or long-term inflation expectations skyrocket. While the continuation of asset purchases is good for the economy, investors should realize that the market is being artificially propped up by the Fed, and if the Fed even thinks about slowing quantitative easing, the market will slide.

Today's Dow leader
Today's Dow leader is Boeing , up 2.1% after competitor Bombardier delayed the flight of its new CSeries Jet for the second time, now scheduling it for July. The CSeries, which has only 200 orders so far, is a narrow-body jetliner that will compete with Boeing's 737. Fool analyst Adam Levine-Weinberg recently took an in-depth look at the plane and the challenges it's facing. You can read more about it here.

Second for the Dow today is Microsoft , up 2% after it was upgraded by Morgan Stanley from neutral to overweight. The analyst cited Microsoft's increased focus on its non-PC businesses, as well as the potential for better results in the PC business.

PC sales saw their biggest percentage drop ever in the first quarter, and industry research firm IDC attributed this partly to Windows 8, which was too radical a departure from previous Windows operating systems. There's some hope that PC sales could get better in the third quarter.

Today is the start of Microsoft's three-day Build Developer Conference, where the company has invited developers to come and hear about new changes to its services. At the conference, CEO Steve Ballmer unveiled an update to Windows 8 with a release called Windows 8.1. The updated version of Windows 8 brings back the familiar "Start" button and features some other updates. We'll have to wait and see whether these changes are enough for consumers to change their tune on Windows 8.

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The article 2 Stocks Leading the Dow Higher originally appeared on Fool.com.

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool owns shares of 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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