By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday held near
five-year highs after reports showed the economy contracted in the
final quarter of 2012 but better-than-anticipated payrolls growth
in January.
"That's probably the most favorable contraction in GDP that you
could have hoped for," Jim Russell, senior equity strategist and
regional investment director, U.S. Bank Wealth Management, said of
the 0.1% annual rate decline in gross domestic product, which was
largely due to a sharp drop in military spending and a smaller gain
in stockpiles.
The Federal Reserve will release a policy statement Wednesday
afternoon after a two-day meeting of the Federal Open Market
Committee.
"There are no fireworks expected," said Russell of the Fed's
coming release, with the FOMC expected to keep policy unchanged and
continue its aggressive bond buying in its continuing effort to
support the economy.
"The Fed could give a nod to the slight improvement in the labor
market nationwide," said Russell, who noted the FOMC has four new
members, who are collectively viewed as "slightly more hawkish," a
reference to those more concerned with curbing inflation than in
keeping interest rates down.
Up 6.4% month-to-date and on track for its best January in 24
years, the Dow Jones Industrial Average (DJI) was lately off 6
points to 13,948.42.
Boeing Co. (BA) was among blue-chip gainers after the aircraft
maker reported quarterly earnings and revenue that beat Wall
Street's estimates.
The S&P 500 index (SPX) dropped 1.05 point to 1,506.79, with
the industrial sector the worst performer and consumer staples the
best of its 10 major industry groups.
U.S.-listed shares of BlackBerry maker Research In Motion Ltd.
(RIMM) fell 5.9% after the Canadian company said it would change
its name to BlackBerry.
The Nasdaq Composite (RIXF) fell 1.41 point to 3,152.25, with
the technology-laden index supported by a 4.8% rise in shares of
Amazon.com Inc. (AMZN) a day after the online retailer reported
better-than-expected fourth-quarter gross profit margins.
Social-networking company Facebook Inc. (FB) climbed 1.1% ahead
of its quarterly earnings report expected after Wednesday's
close.
For every two stocks that rose, three fell on the New York Stock
Exchange, where 334 million shares traded as of 1:50 p.m. Eastern.
Composite volume exceeded 2.1 billion.
Stock-index futures tallied mild losses after the Commerce
Department reported fourth-quarter gross domestic product dropped
at a 0.1% annual rate, the worst performance since the second
quarter of 2009, when the economy remained in recession.
"For the first half of 2013, we do not envisage a very strong
acceleration in economic growth," Kathy Bostjancic, director for
macroeconomic analysis at the Conference Board, said in a
statement. "However, there are reasons for hope in the second half
of the year as the fiscal drag wanes and housing, which long
created a drag on the economy, continues to turn from a headwind to
a tailwind."
A separate report from a payrolls processor said private
companies added 192,000 workers in January, with the
better-than-expected rise coming ahead of Friday's nonfarm payrolls
report for January.
Treasury prices dropped on Wednesday, with the benchmark 10-year
yield (10_YEAR) rising 2 basis points to 2.022%.
The U.S. dollar (DXY)fell against other global currencies,
including the euro (EURUSD).
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