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Final Hour: Investors Look Past a GDP Shock to Future Growth

Stocks in this article: HSH TSN

NEW YORK (TheStreet) -- Stocks showed their forward focus on Thursday, rising despite a Q1 GDP shocker and lackluster housing activity.

There's logic in it: Decent jobs growth, stronger manufacturing and other data this week indicate pent-up demand will show itself in the second quarter. Estimates are as high as 5%, though few expect that kind of bounce.

WATCH: More market update videos on TheStreet TV | More videos from Jane Searle

While markets inch higher, the rally is peppered with caution: Consumer staples and health care stocks put in a good showing on Thursday, while the S&P "safe-haven" gold index outperformed. Many traders have also remarked on very low volatility levels, with debate over whether it signals complacency or is simply a low-vol period where markets move higher.

Another unsettling aspect for many: Treasury bond yields are at multi-month lows. Several dismiss this as central bank muddling in financial markets, as expectations loom of more European QE and loose global monetary policy; others read it as a pessimistic -- or more realistic -- prediction of economic growth.

M&A action helped buoy sentiment, with Hillshire (HSH) adding 17% after being offered a fat deal premium from Tyson (TSN). With organic growth still middling, it makes sense to use spare cash -- those who do it well, are being rewarded.

More broadly, small caps are struggling to eek out gains as investors seek shelter in large liquid stocks. The party's not over, but it's a stockpickers market -- and it's getting tougher. 

-- By Jane Searle in New York 

>>Read More: 

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