NEW YORK (TheStreet) -- Stocks turned positive by early afternoon, shaking off earlier losses that were triggered by a resurgence in economic growth in the second quarter.
The S&P 500 and Dow Jones Industrial Average were flat, and the Nasdaq gained 0.35%.
Western Digital (WDC - Get Report) led the Nasdaq after beating quarterly earnings estimates even in the face of a continued slump in demand for PCs. The surge in Western Digital's share price was also benefiting competitor Seagate (STX - Get Report), which will report its earnings before the bell Friday.
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Second-quarter economic growth may not have been as robust as economists had expected but it was enough for Wall Street to resign to likely Federal Reserve action as soon as September. GDP in the U.S. climbed 2.3% in the second quarter, slightly weaker than an estimated 2.5% increase, though well above a weak first quarter. GDP for the first quarter was revised to show 0.6% growth instead of 0.2% contraction.
"Many people, ourselves included, had looked for a more rapid bounce back from first-quarter weakness. But with first-quarter GDP growing more rapidly than originally thought, today's disappointment is mitigated somewhat," said Dan Greenhaus, chief strategist at BTIG Research, in a note.
"The relative strength in consumption data along with an expected cessation of weakness in business spending and improving inflation metrics should keep the Fed on track to raise rates in September," he continued.
Fed members unanimously decided to leave the benchmark fund rate unchanged at the crises-level of 0% to 0.25% in an announcement Wednesday. The Fed offered no clues as to whether it will seriously consider a rate hike at the central bank's next meeting in September. Nonetheless, a rate hike clearly remains a possibility as the central bank reiterated its viewpoint that the U.S. economy and job market continues to improve.
"The Fed is going to be tightening policy for the first time in nine years," said Phil Orlando, chief equity strategist at Federated Investors, predicting a likely rate hike in September in a phone call. "That must mean that they're finally comfortable with the underlying strength in the U.S. economy and that monetary policy doesn't need to be as accommodative to essentially serve as a crutch for economic growth. Ultimately, the market is going to respond well to that because it means that corporate earnings are going to start to reaccelerate as well."
Facebook (FB - Get Report) shares dropped more than 4% despite beating profit estimates and edging past revenue forecasts. The social network earned 50 cents a share in the second quarter, 3 cents above estimates, on revenue of $4.04 billion. Sales jumped 39%, driven by a 43% increase in advertising revenue.
T-Mobile (TMUS - Get Report) added 3.9% after soaring past earnings estimates in its second quarter. Profit of 42 cents a share beat consensus of 24 cents, while revenue of $8.2 billion jumped more than 14%. Forecasts for customer growth were raised as the company continues to spend aggressively to capture market share.
Wynn Resorts (WYNN - Get Report) shares climbed more than 7% despite a big miss in its recent quarter. The casino owner earned 74 cents a share, 22 cents below estimates, on revenue down 26% to $1.04 billion. The company has faced weak demand in the key gambling region of Macau.
Colgate-Palmolive (CL) was victim to a stronger U.S. dollar in its second quarter, reporting a 6.5% drop in revenue. Stripping away the effects of currency, organic sales climbed nearly 6%.
Whole Foods Market (WFM) tumbled more than 11% after missing estimates on its top- and bottom-lines. Growth slowed at the supermarket chain as comparable-store sales increased 2.2% and average basket size rose 1.7%.
Procter & Gamble (PG) fell more than 2% after reporting a mixed quarter. Earnings of $1 a share beat by a nickel, while revenue fell nearly 10%, hit by a stronger U.S. dollar in its international markets. Organic sales gained 2%.
Time Warner Cable (TWC) shares on watch after the cable company fell below analysts' consensus in its recent quarter. Profit fell 7.2% as programming costs rose 11%. Total sales increased 3.5% to $5.93 billion on the back of robust subscriber growth.
Royal Dutch Shell (RDS.A) jumped 4% after announcing plans to eliminate 6,500 jobs by the end of the year and cut capex spending by $7 billion to $30 billion as part of its attempt to weather a "prolonged downturn" in the oil business.
Weekly jobless claims in the U.S. climbed 12,000 to 267,000 in the week ended July 25, according to the Labor Department. Economists had expected the number of new claims for unemployment benefits to gain at a faster pace to 275,000.