Wall Street flat ahead of Fed after GDP shock
By Rodrigo Campos | January 31, 2013 5:14 AM EST
Stocks were little changed on Wednesday as data showing the economy unexpectedly contracted in the fourth quarter was offset by upbeat parts of the report and strong results from Boeing and Amazon.
Economists stressed that the 0.1 percent contraction in U.S. gross domestic product, caused partly by a plunge in government spending and lower business inventories, is not an indicator of recession.
"Inventories came down and that subtraction is actually positive for the private sector," said Jim Russell, chief equity strategist for U.S. Bank Wealth Management in Cincinnati.
"A lot of the important components going forth are there, like consumption by individuals and capital spending, and they are looking strong."
Wall Street opened slightly higher despite the GDP data, with traders awaiting a statement from the Federal Reserve after its two-day policy-setting meeting. The Fed is expected to keep monetary policy on a steady, accommodative path, though debate continues over when it should curtail its bond-buying program.
The S&P 500 held above 1,500, seen by technical analysts as an inflection point that will determine the overall direction in the near term. The index is on track to post its best month since October 2011 and its best January since 1997.
"It is too soon for the Fed to start talking about the end of (their bond buying program); the economy needs stimulus to sustain this recovery."
The Dow Jones industrial average <.DJI> rose 0.27 points or 0 percent, to 13,954.69, the S&P 500 <.SPX> lost 1.04 points or 0.07 percent, to 1,506.8 and the Nasdaq Composite <.IXIC> dropped 0.11 points or -0 percent, to 3,153.55.
Amazon rose 5.4 percent to $274.40 and Boeing rose 1.2 percent to $74.54.
Thomson Reuters data showed that of the 192 companies in the S&P 500 that have reported earnings this season 68.8 percent have been above analyst expectations, which is a higher proportion than over the past four quarters and above the average since 1994.
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Giving the market extra support, private sector employment topped forecasts with the ADP National Employment report showing 192,000 jobs added in January, higher than the 165,000 expectation.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry and Nick Zieminski)