Stocks mostly up after latest GDP reading
NEW YORK -- Stocks were trading in a narrow range early Friday as a new report showed the nation's economy continued to shrink, but at a smaller pace than expected.
European markets were modestly lower Friday as well, after Asian markets posted big gains overnight.
The government said Friday that the economy slowed at a rate of 1% during the quarter, better than the 1.5% decline expected by analysts.
However, the data also showed consumers cut their spending, a troubling sign as consumer spending accounts for more than two-thirds of economic activity.
"Investors have been trying to trade on any bit of good news, but it's not good," Steven Stahler, president of the Stahler Group in Baton Rouge said of the report.
The report is the strongest sign yet that the ongoing recession is winding down, but still ongoing. The measure, known as gross domestic product, is considered the best barometer of the nation's economy.
The Commerce Department revised the first-quarter GDP figure much lower, saying economic activity tumbled 6.4%. That is the worst quarterly reading in nearly 30 years.
Consumers cut spending by 1.2% in the second quarter, after a 0.6% increase in the first quarter.
Investors have been looking to consumers to help lead the economy out of a recession. Spending has been cut as consumers continue to worry about jobs. The unemployment rate is expected to move higher after hitting a 26-year high of 9.5% in June.
"We're still not in very good shape in the employment part," Stahler said, adding he doesn't expect to see consumers leading the country out of recession soon.
The report has given investors pause after they restarted a two-week rally on Thursday after welcoming a batch of stronger-than-expected earnings reports. Thursday's gains pushed all the major indexes to their highest closes since last fall.
Earnings reports Thursday showed companies are still struggling amid the recession, but the problems aren't as deep as investors were expecting heading into earnings season. The market was also boosted by a surprise drop in the number of people continuing to seek unemployment benefits.
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