Stocks Get Early Lift

Better-than-expected reports on economic growth and payrolls help lift Wall Street. However, traders are still awaiting the outcome of the Fed's meeting on rates, and that will likely determine the session's final results.
By Sarina Penn ,

Updated from 7:54 a.m. EDT

Wall Street was rising at the open Wednesday as the morning's economic data suggested the U.S. economy is holding up a bit better than had been thought, although investors remained cautious ahead of the

Federal Reserve's

looming interest-rate decision.

The

Dow Jones Industrial Average

was adding 29 points to 12,860, and the

S&P 500

was rising 4 points at 1395. The

Nasdaq Composite

tacked on 6 points to 2432.

Stock index futures had been pointing to a lower open earlier, but buyers gained an edge after the Commerce Department issued a preliminary gross domestic product report that showed growth of 0.6% in the first quarter, a hair higher than consensus and flat with last quarter.

The numbers, do, however, often undergo revisions. If they remain substantively accurate, though, they would indicate that the U.S. economy, at least for now, has

avoided a recession

, contrary to what many economists and consumers previously believed.

Still, regardless of what occurs in the first few hours of the trading day, the culmination of the session may well be determined by what the central bank decides at the conclusion of its two-day gathering. The Federal Open Market Committee, the policymaking arm of the Fed, is due to post its interest-rate decision at 2:15 p.m. EDT, and its statement should also clue investors into whether the central bank will give its rate-easing cycle a rest.

The Fed has pulled the fed funds target rate down by three percentage points since September in an effort to rev up the credit-crunch-battered U.S. economy, which decelerated sharply last quarter and continues to show signs of distress in unemployment numbers, manufacturing declines and sliding consumer spending.

At the same time, a relentless upward drive in commodities prices have spurred considerable inflationary worries, and two members of the FOMC dissented from the last rate-cut decision for that very reason. Nevertheless, futures were recently pricing in a high chance that the fed funds target rate, which currently stands at 2.25%, will be decreased by another 25 basis points. The discount rate, or that at which the Fed lends money to banks, is currently at 2.50%.

Elsewhere on the economic docket, ADP said that nonfarm payrolls rose by 10,000 workers in April, far better than the consensus forecast for a loss of 60,000 jobs, and up from a revised gain of 3,000 jobs in March. The government's official jobs report should come out Friday, and the two reports don't always agree.

On the corporate side,

Citigroup

(C) - Get Report

dropped 3.3% after the banking behemoth announced after the prior market close that it plans to offer $3 billion in stock in order to shore up its dwindling cash pile.

As for the day's earnings, Dow component

General Motors

(GM) - Get Report

widened its first-quarter shortfall, but the carmaker topped expectations when stripping out items. On an adjusted basis, GM lost 62 cents a share, compared with Thomson Financial's $1.60 targets. Shares climbed 5.9%.

Fellow Dow member

Proctor & Gamble

(PG) - Get Report

meanwhile posted rising first-quarter earnings of $2.71 billion, or 82 cents a share, edging past the consensus analyst estimate by a penny a share. P&G also bumped up the lower end of its current-quarter outlook by 2 cents a share.

Among other quarterly reports,

Alcatel-Lucent

(ALU)

and

Garmin

(GRMN) - Get Report

missed estimates, while

Kraft

(KFT)

guided estimates higher for the year.

Time Warner

(TWX)

was slightly worse than expected with its profit, though shareholders applauded the media company's decision to split off its cable unit,

Time Warner Cable

(TWC)

. The stock was up 1% in the early going.

Commodities surrendered more ground. Crude oil was slipping 26 cents to $115.37 a barrel, and gold futures were off $10.20 to $866.60 an ounce.

Treasury prices were picking up. The 10-year note rose 5/32 in price to yield 3.80%, and the 30-year bond added 12/32 in price, yielding 4.53%.

The major overseas markets were uniformly lower. In Asia, Tokyo's Nikkei 225 lost 0.3% overnight to 13,850, and Hong Kong's Hang Seng Index shed 0.6% at 25,755. As for Europe, the FTSE 100 in London, Germany's Xetra Dax and the Paris Cac were all falling 0.3% or more.

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