Modest advance for Wall Street

Wall Street managed a modest advance in light pre-holiday trading today, boosted by weakening oil prices and a gross domestic product report that showed the economy expanding at a faster pace than previously thought.

Stocks, which have made gains this week on hopes that the US economy has slowed enough to ward off further interest rate hikes, meandered and then turned higher during the session on thin volume ahead of Labour Day.

The Commerce Department reported the economy as measured by GDP grew at a 2.9% annual rate in the second quarter, better than first estimated last month though still a decline from the first quarter.

Investors have been scrutinising economic reports to determine whether the economy is slowing too much, a trend that could harm both consumer and corporate spending. So a slight improvement in the GDP was a welcome sign for investors, who are now looking to a job report on Friday for further direction.

“The GDP is exactly what we wanted to see, and the economy continues to expand and it limits inflation worries,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher. “GDP numbers are still a lagging indicator, and the market pulled back because investors are still looking for concrete evidence the Fed is in pause mode.”

Also propping up the markets was a continued decline in oil, which dropped to three-month lows this week. Prices have hovered near 70 per barrel, and slipped today after the US Energy Information Administration reported that inventories of crude, petrol diesel and heating oil all rose last week.

The Dow Jones industrial average rose 12.97, or 0.11%, to 11,382.91.

Broader stock indicators showed mixed results. The Standard & Poor’s 500 index was down 0.01, or nearly unchanged at less than 0.01% as it closed at 1,304.27. The Nasdaq composite index rose 13.43, or 0.62%, to close at 2,185.73.

The Dow and S&P 500 have been trading near their highest point in three months, while the Nasdaq is close to a seven-week high.

Advancing issues were well ahead of decliners on the New York Stock Exchange.