) -- Major U.S. stock markets strengthened Wednesday and bond yields tempered as a worse-than-expected report on economic growth bolstered prospects for the

Federal Reserve

to maintain its monetary stimulus program.


S&P 500

jumped 1% to 1,603.26. The gauge remains poised to decline for the month having fallen 1.7% since the beginning of June. The

Dow Jones Industrial Average

also added 1% to 14,910.14 while the


gained 0.9% to 3,376.22.

In an unusual twist of market action, traders on Wednesday bid up the major U.S. indices on the notion that a weaker GDP report suggests the Fed will continue its pace of mortgage-backed securities and longer-term Treasuries purchases.

"The Fed has stated they will begin to end the quantitative easing and it's going to be data dependent, so they saw a little bit weaker data," Rick Robinson, southwest regional chief investment officer of Wells Fargo Private Bank, said about the GDP revision. "The markets are anticipating that perhaps some of the recent data or these downward revisions are showing that the economy is not as strong as the Fed had thought and that it could delay the tapering."

"It's kind of a joke when you think about it, because the whole reason people are willing to be long stocks is if basically the central bank is in there to bail them out," said Uri Landesman, president of Platinum Partners. "At some point the central bank is going to have to pull away ... and then it's going to go down."

Further boosting sentiment for the Fed to continue its current policies came from European Central Bank President Mario Draghi who reiterated Wednesday before members of the French lower house of parliament that the ECB's crisis backstop plans remain in place and that the bank stands "ready to act again when needed."

Draghi's comments follow Fed Chairman Ben Bernanke's statements a week ago that the bank would consider curbing its stimulus measures later this year pending stronger economic data. Markets around the world also breathed easier as liquidity fears in China appeared to subside after the country's central bank acted to ease interest rates.

The benchmark 10-year Treasury was rising 19/32, lowering the yield to 2.542%.

August gold futures

plunged $45.30 to $1,229.80 an ounce.

A worse-than-expected GDP report was published by the Bureau of Economic Analysis showing first-quarter gross domestic product at 1.8%, down from its prior estimate of an annualized rate of 2.4%. Economists were expecting the estimate to remain the same. The main downside surprise was in personal consumption, revised down by 0.8 percentage points to 2.6%.

The GDP report "paints a picture of an economy with clearly less growth momentum at the start of the year than previously suggested," Peter Newland, a New York-based economist at Barclays, wrote in a note. "To achieve the FOMC's current growth projection for the year as a whole would take a significant acceleration in H2

the second half, something we judge very unlikely," he added.


(TDC) - Get Report

closed higher by 3.9% to $50.40. The analytic data solutions company on Wednesday announced that it was introducing an expanded version of its Hadoop integration and product line through a partnership with



Hartford Financial Services Group

(HIG) - Get Report

rose 2.8% to $29.99 after the insurer hiked its share repurchase program by $750 million to $1.25 billion and increased its quarterly dividend by 50% to 15 cents a share.



slipped 0.55% to $100.84 after the seed giant reported third-quarter net income that fell 3% to $909 million, or $1.68 a share, as revenue suffered from poorer performances at its cotton and soybean seed businesses.

Five Below

(FIVE) - Get Report

shares plunged 6.3% to $35.78 after the discount accessories, toy and craft retailer priced a secondary offering on Wednesday that could present selling shareholders as much as $216 million in proceeds

if orders are met


A leading indicator for single-family home sales and housing construction was also downbeat. The Mortgage Bankers Association's Weekly Mortgage Applications Survey showed that mortgage applications decreased 3% in the week ended June 21 from a week earlier after interest rates moved up sharply following the Fed's press conference last week.

The People's Bank of China said in a statement Tuesday that it had injected liquidity into some financial institutions that required it to stabilize interbank lending rates and reiterated that it would ensure the proper regulation of banking system liquidity and stability of money market rates through short-term liquidity operations as well as its full-range of existing loan-facility tools.

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Written by Andrea Tse and Joe Deaux in New York

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Andrea Tse