Stocks Hope for More Bounce After In-Line GDP

Stocks are looking mixed on this morning's tame revised gross domestic product data, with S&P 500 futures still pretty flat and Nasdaq futures treading higher.

At 8:30 a.m EDT, the GDP came in unrevised at 5.4%, compared to Reuters' consensus poll estimates of a 5.2% increase. Last quarter, GDP was up 7.3%. The implicit price deflator came in unrevised at 2.7%, in line with Reuters' consensus poll estimates and above last quarter's 1.9%.

At 9:11 a.m. EDT, the S&P 500 futures had fallen back to a positive 3.8 points, just 1 point above fair value and not much of an indication for the early going. The Nasdaq 100 futures had also lost some ground, up 35 points compared to the 45 points they were up earlier. This could still indicate some buying sentiment for large-cap tech stocks at the open.

The Treasury market had turned up slightly on the news, and the 10-year note was off only 1/32 at 100 3/32 and yielding 6.485%.

Some say the in-line data may help yesterday's late rally carry over into this morning's action.

"It looks like we should have a continuation of yesterday's rally," said Jim Benning, a trader at BT Brokerage. "Futures are still up after the data."

"I think it got a little oversold in previous days. We should see some more rocky days ahead, however, and I wouldn't be surprised to see it retest Tuesday's lows," he said.

Meanwhile, the market will probably look for some more clues to where the Federal Reserve plans to take interest rates later today when Fed chairman Alan Greenspan addresses the National Association of Urban Bankers at 3 p.m. EDT. But it might not get any.

"The Fed may make some cryptic comments but I would be surprised if he were to say anything substantial," about interest rates, Benning added.

In any case, today's in-line GDP data could help give the market some direction.

There has been some pretty erratic action in the last few days as the bulls and bears of the market fought it out with a seesaw of selloffs and snapback rallies. Tuesday's action shaved 200 points off of the tech-heavy Nasdaq, taking it to a six-month low on paltry volume. The index then rattled between ups and downs early yesterday, finally gaining ground in the late afternoon on more significant volume and closing up 106.04, or 3.35%, to 3270.59. The Dow Jones Industrial Average and the S&P 500 took similar paths, careening toward mid-April lows on Tuesday, then jockeying back and forth early and rallying to close higher yesterday.

What all this means is that the market is still pretty much in the dark about when the economy will show signs of really slowing, and when the Fed will quit its rate-boosting game. Will Greenspan be forced to yank the economy down into a hard landing with another interest-rate increase of 100 basis points, or will he be able to steer the economy into a soft landing with just a 50-basis point increase?

Some investors may be expecting softer numbers already. They might take some comfort from a recent rally in the financials, says our very own Jim Cramer, which could be right in predicting a slowdown. And while retailers got slammed after Costco(COST Quote) reported weaker-than-expected earnings, this news could give the market hope that consumer spending is cooling.

Meanwhile, there may be some kinks in UAL's(UAL Quote) plans for acquisition of US Airways(U Quote), which would create the largest airline in the world. Yesterday, the airline sector and US Airways stock got quite a bit of air on the news, as strategists predicted it would lead to a consolidation rush. But antitrust bodies, consumers and the powerful pilots union at UAL's United Airlines have already voiced some opposition to the acquisition plans, and the market is speculating that American Airlines and Delta will try to knock the deal off its feet.

For today's earnings, check out today's earnings table.

The large European bourses continued to bounce at midsession, with Frankfurt's Xetra Dax up 135.83 to 6970.7 and the Paris CAC 133.17 higher to 6160.27.

Across the Channel, London's FTSE was up 70.7 to 6189.3.

The euro was trading down at $0.9014.

The major Asian markets were mixed overnight on the late afternoon rally in U.S. markets, after hitting six- and 12-month lows in Hong Kong and Tokyo respectively Tuesday.

In Hong Kong, the Hang Seng index was weighed down by continuing concerns over higher interest rates and a sluggish local real estate market. The benchmark index closed down 12.92 to 13,921.06.

In Tokyo, the Nikkei index was up 203.38 to 16,247.82.

In Tokyo currency trading, the dollar was little changed against the yen, fetching 107.71 yen.