Stocks Track Higher

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's likely to determine the session's final results.
By Sarina Penn ,

Updated from 9:54 a.m. EDT

Wall Street was building on its gains early 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 68 points to 12,900, and the

S&P 500

was rising 5 points at 1396. The

Nasdaq Composite

tacked on 14 points to 2440.

Buyers had an edge at the open 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. GDP numbers 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 in to whether the Fed will give its rate-easing cycle a rest.

The central bank 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 likelihood 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, the April Chicago Purchasing Managers' index came in at 48.3, indicating a slight contraction in Midwest factory activity. That's a bit better than the 47.5 reading that economists were expecting, and nearly unchanged from March numbers. The index's breakeven point is 50.

Also, 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, Dow member

Citigroup

(C) - Get Report

dropped 3.8% 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,

General Motors

(GM) - Get Report

helped keep the Dow aloft even though the carmaker widened its first-quarter shortfall. Stripping out certain items, GM topped Thomson Financial's $1.60 analyst targets with a loss of 62 cents a share. The stock climbed 8.8%.

Fellow industrial

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. The stock rose 2.6%.

Ingersoll Rand

(IR) - Get Report

tracked up 3.7% on a surging first-quarter profit from continuing operations, but

International Paper

(IP) - Get Report

said rising commodities prices, among other things, helped pull down its first-quarter results, and shares were sliding 4.8%.

Separately, IT-services firm

Savvis

(SVVS)

was downgraded by at least three analysts after swinging to a first-quarter loss and chopping down its full-year sales forecast. Shares were plummeting 22.5%.

Among other quarterly reports,

Alcatel-Lucent

(ALU)

and

Garmin

(GRMN) - Get Report

missed estimates, bringing shares down 5.5% and 12.1%, respectively, while

Kraft

(KFT)

guided estimates higher for the year. Kraft shares were up 3%.

Time Warner

(TWX)

was slightly worse than expected with its profit. Shares had a positive start as shareholders seemed to commend the media company's decision to split off its cable unit,

Time Warner Cable

(TWC)

, but recently the stock was off 1%.

Crude oil recovered from an early slip, recently adding 75 cents at $116.38 a barrel, even though the Energy Information Administration said crude stockpiles were up by 3.8 million barrels last week. Gold futures were losing $2.20 at $874.60 an ounce.

The U.S. dollar firmed fractionally against the euro to $1.5558 while adding 0.4% against the yen at 104.44.

Treasury prices were picking up. The 10-year note rose 7/32 in price to yield 3.79%, and the 30-year bond added 11/32 in price, yielding 4.53%.

The major overseas markets were mixed. 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 all recouped earlier losses to rise 0.2% or more.

Loading ...