By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Economy grew by 4% annual pace in second quarter
NEW YORK (MarketWatch) -- U.S. stock futures leapt on Wednesday
after government data showed the economy grew much faster than
economists forecast, fueled by consumer spending.
The 4% annual growth outweighed a smaller-than-expected gain in
private-sector jobs during July.
Tech stocks were shining as shares of Twitter Inc. (TWTR)surged
in heavy premarket volume after the social media network's results
beat Wall Street forecasts. Futures for the Nasdaq-100 index (NDU4)
rose 24 points, or 0.6%, to 3,976.50.
Futures for the Dow Jones Industrial Average (DJU4) gained 67
points to 16,912, while those for the S&P 500 index (SPU4) rose
9 points to 1,971.50.
The U.S. economy grew at a 4% annual pace in the second quarter,
bouncing back from a revised 2.1% decline in the first three months
of the year, according to a preliminary government estimate.
Inflation as measured by the Federal Reserve's preferred price
index surged in the second quarter to the highest annual rate in
three years, potentially making the central's bank effort at
managing the U.S. recovery more difficult.
Separately, the 218,000 jobs added by the private sector in July
fell short of Wall Street expectations.
Investors also remain focused on the outcome of the Federal
Reserve's meeting and the policy statement due at 2 p.m. Eastern
Time. Economists expect the central bank to reduce the monthly pace
of its bond purchases by another $10 billion to $25 billion, and to
signal that it intends to end quantitative easing in October.
Markets will be glued to the Fed's statement, though, to see if
there's any hint that the first interest-rate hike from the Fed
could come sooner than expected or that rates could go up faster
than anticipated.
Also read: This tweak from the Fed could rock the market
U.S. stocks ended a choppy session lower on Tuesday after
tougher sanctions against Russia for its role in Ukraine's civil
war were announced. The S&P 500 (SPX) closed 9 points, or 0.5%,
lower at 1,969.95 on Tuesday, while the Dow Jones Industrial
Average (DJI) ended 70.48 points, or 0.4%, lower at 16,912 as
upbeat data were overshadowed by those sanctions.
The Russia MICEX index of blue-chips surged more than 2% on
Wednesday, which one analyst said is because the new sanctions
don't affect the country's key gas sector. Some strategists
maintain, though, that Russia stocks remain a tricky bet in wake of
those sanctions.
Also read: Need to know: Ditch your 'portfolio patriotism' ahead
of dog days of August
Twitter rules
Shares of Twitter leapt 25% as analysts moved up price targets
in the wake of blowout results. "Stronger results amid a negative
sentiment should propel the stock higher," said Cantor Fitzgerald
analyst Youssef Squali in a note to investors. He lifted his price
target to $58 from $40. Read: Can Twitter convert the
'logged-out'?
Garmin (GRMN)sharply raised its forecast for the year, with the
GPS -devices maker citing strong first-quarter results as reason
for the improved outlook. Shares gained 7.4% ahead of the bell.
Humana(HUM) shares rose nearly 2% premarket. The health care
insurer's profit fell slightly short of expectations, but sales
beat forecasts. The company also confirmed its 2014 per-share
guidance.
Shares of Sprint (S) rose 2.4% ahead of the open after the
mobile-phone company swung to a profit in the second quarter, as
the pace of subscriber losses slowed.
Amgen(AMGN) shares rose 4.8% in premarket after the company
posted a 23% rise in earnings, and announced a 15% cut in its
workforce as part of a restructuring program late Tuesday.
DreamWorks Animation SKG Inc. shares (DWA) fell 14% after the
movie studio swung to a second-quarter loss. (Read more about the
day's notable movers here:
http://www.marketwatch.com/story/twitter-amex-yelp-among-stocks-to-watch-2014-07-29.)
In other markets, crude-oil prices (CLU4) rose, gold (GCQ4) gave
up gains and fell after the strong GDP data. The dollar index
(DXY), which measures the greenback against a basket of six
currencies, traded slightly higher..
European stocks traded mostly lower, outside of gains in Spain
after surprising economic growth data. In Asia, Hong Kong stocks
rose for a seventh straight session.
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