U.S. stocks climbed Wednesday as investors cheered a report of stronger economic growth. Technology companies, retailers and travel providers made solid gains.
The Commerce Department raised its estimate for economic growth and said that in the April-through-June quarter, the U.S. gross domestic product grew at its fastest pace in two years. Stocks were wobbly at the outset, but investors’ concerns about tensions between the U.S. and North Korea appeared to ease and stocks moved up as the day wore on. Healthcare companies and banks rose. Big names such as Microsoft, Amazon and Facebook made some of the biggest gains.
“For all the tough times we’ve had the last couple of weeks, the thing that’s kept the market afloat is the strong economic data,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. With more economic reports coming in the next few days, Schutte said that investors will be looking for evidence of higher pay and greater inflation and that stocks should keep rising as long as the economy remains in good shape and inflation doesn’t pick up.
The Standard & Poor’s 500 index climbed 11.29 points, or 0.5%, to 2,457.59. The Dow Jones industrial average ticked up 27.06 points, or 0.1%, to 21,892.43. The Nasdaq composite jumped 66.42 points, or 1.1%, to 6,368.31 as technology companies rose for the third day in a row. The Russell 2000 index of smaller-company stocks advanced 7.64 points, or 0.6%, to 1,391.32.
The government raised its GDP projection from last month, and the second-quarter estimate is better than the first quarter, when growth was 1.2%. Meanwhile, private businesses added 237,000 jobs in August with broad gains across several industries, including construction, manufacturing and leisure and hospitality, according to a survey by payroll processor ADP.
Analog Devices shares climbed 5.2% to $83.72 after the chipmaker announced strong results in the third quarter along with a better-than-expected revenue forecast for the current period.
AeroVironment soared 18.2% to $46.52 after the Monrovia drone-maker said its product sales almost doubled in its fiscal first quarter.
Microsoft rose 1.3%, to $74.01. Facebook ticked up 1.1% to $169.92. Amazon advanced 1.4% to $967.59. Bank of America climbed 1.7% to $23.87.
Gasoline prices leaped to two-year highs, and oil prices continued to fall as the Gulf region was inundated with rain by Tropical Storm Harvey, which has knocked out significant oil drilling and refining capacity. On Tuesday, the largest oil refinery in the U.S. was closed and the operator of a major pipeline carrying fuel to the East Coast said it was running at a reduced rate.
The storm has dumped a record amount of rain on the Gulf Coast. Authorities say more than 20 people have died in the storm and more than 32,000 people were in shelters in Texas alone.
Wholesale gasoline rose 10 cents, or 5.7%, to $1.88 a gallon. Benchmark U.S. crude fell 48 cents, or 1%, to $45.96 a barrel in New York. Brent crude, the international standard, fell $1.14, or 2.2%, to $50.86 a barrel in London.
stumped for tax cuts in an afternoon speech in St. Louis, and although investors want to see taxes come down, Wall Street’s reaction was muted.
“Expectations are low enough that if anything gets done, Wall Street will cheer it,” said Schutte, of Northwestern Mutual.
The Food and Drug Administration approved the first treatment that genetically engineers patients’ own blood cells to seek and destroy childhood leukemia. The drug, Kymriah, is made by Novartis, and several other companies are working on similar treatments. They are called CAR-T therapies, and they are being developed for other cancers.
The approval wasn’t a surprise to investors, and Novartis stock slipped 1.1% to $82.74. Gilead Sciences jumped 7.2% to $81.23, however. Earlier this week, the company agreed to buy CAR-T drug developer Kite Pharma for $11.9 billion. Juno Therapeutics, which is studying a similar treatment, slid 8% to $40.29.
Meanwhile, Otonomy plunged 82.8% to $3.58 after the San Diego company ended development on vertigo drug Otividex after it failed in a clinical trial.
Bond prices inched down after a big jump the day before. The yield on the 10-year Treasury note rose to 2.14% from 2.13%.
Heating oil rose 1 cent to $1.67 a gallon. Natural gas fell 4 cents to $2.94 per 1,000 cubic feet.
Gold fell $4.80 to $1,314.10 an ounce. Silver fell 2 cents to $17.40 an ounce. Copper fell 2 cents to $3.06 a pound.
The dollar rose to 110.36 yen from 109.71 yen. The euro fell to $1.1890 from $1.1992.
European stocks bounced back after several days of losses. Germany’s DAX and the French CAC 40 both rose 0.5%, and the FTSE 100 in Britain added 0.4%. In Japan, the Nikkei 225 rose 0.7%. South Korea’s Kospi gained 0.3%. Hong Kong’s Hang Seng jumped 1.2%.
2:40 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 9:30 a.m.