Markets shrugged off news of weaker-than-expected first-quarter growth in U.S. gross domestic product and responded positively, if modestly, to news of stronger-than-expected consumer confidence.
Although growth is slowing in the U.S., it's seen as the strongest market right now. The overall European economy continues to reel, the U.K. economy is in a double-dip recession, and GDP growth is slowing in China and negative in Japan. Meanwhile, U.S. GDP growth is in line with the Federal Reserve Board's moderate growth prediction.
Spain, Europe's fourth-largest economy, reported a relentlessly rising unemployment rate -- more than one-half of Spaniards under the age of 25 are jobless. That, following an S&P downgrade, has economists wondering if the country will go the way of Greece.
Stocks. Italy's successful $4.9 billion bond offer lifted European stocks, but unexpected declines in German and French consumer confidence indexes mitigated the rise. European debt concerns spread to Asian markets overnight with Japanese, Chinese, and Australian bourses declining. U.S. stocks rose on rosy consumer confidence and good performance in consumer-related stocks such as Amazon.com Inc. (Nasdaq: AMZN) and Expedia Inc. (Nasdaq: EXPE). China's market also declined due to lower corporate earnings that negated optimism the country would ease monetary policy.
Bonds. Ten-year Treasury yields headed for their sixth weekly decline, helped by the Commerce Department's report on lackluster U.S. economic growth. June T-bills were also propped up on U.S. jobless claims and a larger-than-expected decline in the Chicago Fed National Activity Index.
Currencies. The yen rose to a 1-1/2-week high despite Japan's central bank boosting its asset-purchase program. Investors fled for shelter into the British pound, raising it to a 7-1/2-month high against the dollar and a 22-month high against the euro. The dollar fell to a four-week low after the GDP report was released.
Commodities. The June crude-oil futures price declined on the GDP report and Spain's credit downgrade. Gasoline went up as the dollar weakened, and natural gas rose on unseasonably cool weather in the Northeast. July deliveries of wheat and corn rose, while cattle and hogs slipped. The winner has been soybeans, which continued a march upward unlike any seen since July 2008. July copper advanced for the fourth straight day. Aluminum, tin, zinc, and nickel also increased.