"Markets Recover from a 110 points loss but Bears win"

GDP disappoints while Consumer sentiment is Low.

The DJIA (10,457, -10.45, -0.10%) fell as much as 120 points soon after the open, though the blue-chip average pared losses to recently trade at 10,457, down 11 points, or 0.1%. Still, stocks are set to close out a particularly strong month on Friday. The Dow average and the S&P – SPX (1,102, +0.80, +0.07%) are on pace for their first monthly gains since April and their biggest monthly increases since July 2009. U.S. stocks fell Friday after Government data showed economic growth slowed in the second quarter, though they regained some lost ground after better-than-expected reports on consumer confidence and manufacturing.

A survey by Reuters and the University of Michigan showed consumer sentiment fell in late July to 67.8 from 76 in late June, still better than an earlier reading and economists’ estimates. A separate report on Chicago manufacturing showed a surprise strengthening in the region.

The Government’s estimate of U.S. Gross Domestic Product (GDP), or the value of all goods and services produced, having risen 2.4% in the second quarter, down from its latest estimate for first-quarter GDP of 3.7%, follows a recent trend of weak economic data.

And while corporate results have largely been beating analysts’ estimates this investments earnings season, Merc and Chevron both posted revenue below expectations Friday morning, adding to investors’ concerns. The declines came after the Commerce Department said U.S. gross domestic product, or the value of all goods and services produced, rose at an annualized seasonally adjusted rate of 2.4% in April to June, smaller than the 2.5% growth that was expected. The report showed growth was lifted by business and exports while consumer spending, a key growth engine for the U.S. economy, made a smaller contribution to growth.

In the first quarter, the economy grew by 3.7%, revised up from an originally reported 2.7% increase. But growth estimates all the way back to the start of 2007 were revised lower.

Separate data released Friday showed a weak economy held down U.S. wages and salaries in the second quarter as high unemployment curbed workers’ abilities to push for larger pay packages. The employment cost index gained 0.5%, in line with expectations.

The dollar strengthened against the euro, which slipped to $1.3006 in recent trading. However, the yen rose to a 2010 high against the dollar. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, edged up 0.3%.

Treasurys were also higher, pushing the yield on the 10-year note below 3% to 2.92%.
COURTESY: WALL STREET GRAND JOURNAL