Hot Wall Street Caps Best July in 20 Years

(CBS/AP)  Traders are using good news about the economy to give the stock market its best July in 20 years.

Stocks have tacked on moderate gains after the government said the economy shrank at a slower pace than expected in the April-June quarter.

Investors have been placing big bets this month that the longest recession since World War II is finally receding. The Dow has finished the month with an 8.4 percent gain - its strongest July since 1989, when it gained 9 percent. It's the blue chips' best performance of any month since October 2002.

According to preliminary calculations, the Dow is up 17 to 9,171. The Standard & Poor's 500 index is up just shy of a point to 987 and the Nasdaq is down 5 to 2,978.

The government said the nation's gross domestic product, a measure of the economy's total output, slowed at a rate of 1 percent during the quarter. That was better than the 1.5 percent drop expected by analysts.

The report is the strongest sign yet that the recession is winding down. However, the Commerce Department revised the first-quarter GDP figure much lower, saying economic activity tumbled 6.4 percent. That is the worst quarterly reading in nearly 30 years.

The report also found that consumers cut their spending in the second quarter, a troubling sign as consumer spending accounts for more than two-thirds of all U.S. economic activity.

"Investors have been trying to trade on any bit of good news, but it's not good," Steven Stahler, president of the Stahler Group in Baton Rouge, La. said of the report.

But there has been other good news in July. Stocks are up 13 percent since July 13 when investors bet correctly that Goldman Sachs Group Inc. would report enormous earnings. Since then, other profit reports have brought hope that the recession's end may be nearing. AT&T Inc., chip maker Intel Corp. and heavy equipment maker Caterpillar Inc. all posted results that outran expectations.

Three out of four companies in the S&P 500 index that reported second-quarter results so far have topped analysts' expectations, according to Thomson Reuters. About 300 of the 500 companies have reported.

The GDP report has given investors pause after they extended a three-week rally on Thursday after welcoming a batch of strong earnings reports. Thursday's gains pushed all the major indexes to their highest closes since last fall.

But Thursday's earnings reports showed some companies are still struggling amid the recession, though the problems aren't as deep as investors were expecting heading into earnings season. The market was also boosted by a surprise drop in the number of people continuing to seek unemployment benefits.

[speakinup22]

Once again CBS has tried to make things sound rosie for barry, when in fact the CCI is STILL in the toilet.

When we come out of this economic funk, it WILL NOT happen overnight. And, No matter how much you add to the national debt, it is NOT going to help except in the short run. Get a clue.

[debinok1]

It would appear that the "PATCHES" are holding and the bubble might hold air. Unemployment is the only patch that seems weak. If unemployment continues to rise as it has been, then the bubble is only as strong as its weakest patch. This is not over by a long shot.

[grabandgo]

So Wall street gets a bonus from hardworking American's who will see nothing except taxes over 50% when obama is done "helping" our economy.

[Skifun2]

Can you imagine what Republicans would say after one of their candidates was elected in the worst economic recession since the depression or even the last recession period, with a around happeinging in less than 200 days? They would be singing their praise. Rush would be telling us how great the conservative are...Well some credit is due to the present administration. Now I am cautious on the earning reportings that are coming out as I am an executive and know how corporations use cost the economic state of fairs to right size without consideration at all for employees or the public.

[snake28281]

LOOK FOR INFLATION TO RISE OUT OF CONTROL-DOUBLE DIGITS-BY THE END OF THE OBAMA TERM AND THEN WE WILL SEE WHAT PEOPLE HAVE TO SAY

[aldon62]

Dude, stop with the caps, you're boring!

[snake28281]

$150 PER MONTH INCREASE IN ELECTRIC BILL POSSIBLE NEXT YEAR WITH NEW ENERGY BILL PUSHED THRU BY PELOSI-PAY FOR THE WINDMILLS BABY<NOT OIL DRILLING NOR COAL-HOW IS THAT GONNA GO OVER WITH PEOPLE STRUGGLING LIKE ME A 30% PAYCUT SINCE SEPTEMBER AND THOSE OUT OF WORK?

[snake28281]

NEWT GINGRICH FOR PRESIDENT!

[Benton09]

Seig Heil!

[bradkt1]

The first thing that had to happen for the economy to improve was to stop the hemmoraging and downward spiral. That appears to have happened. The second thing is for investor confidence to return. That appears to be on the verge of happening. Both home sales and the stock market are inching back up. It's not a clear trend yet, but it is a beginning...and is most welcome news to everyone except for those who want our President and country to fail in order to assist their selfish return to political power.

[snake28281]

IF DEMS HAVE THEIR WAY WE WILL HAVE GUN CONTROL TOO;SORRY-BUT CROOKS ARE GONNA GET THE WEAPONS THEY NEED SO WHY CANT I-IT GIVES CROOKS SOMETHING TO THINK ABOUT-EH-WHEN TAXES GET RAISED IN THE FUTURE-WHICH THEY WILLSINCE FED DEFICIT TO QUADRUPLE AT THIS RATE IN ABOUT 12 YRS-YOU WILL SEE ALL THE RICH IN WALLSTREET PULL THEIR MONEY OUT AND THE DOW WILL TANK;THE DOW MAY ALSO TANK IF NTL HEALTHCARE GOES THRU AND THIS WILL PUT MANY SMALL BUSINESS OWNERS UNDER ADDING TO EVEN FURTHER UNEMPLOYMENT;STAND BY!

[snake28281]

TOO MANY PEOPLE VOTED AND KNEW NOTHING OF THE ISSUES THEY WERE VOTING FOR-I VOTED ON THE ISSUES,NOT ON WHAT COLOR/GENDER SOMEONE WAS-SHLDNT VOTE AT ALL UNLESS YOU ARE VOTING ON THE ISSUES;WE CAN CHANGE THIS COUNTRY FOR THE BETTER IN 2010 BY GETTING CONGRESS A MAJORITY GOP;TEXAS AND THE REDBELT STATES HAVE IT RIGHT

[retiredgustav]

Texas is #1 in all of the wrong things thanks to the consevatives. We have the highest home owners insurance rates in the country along with the highest electric rates thanks to Bush and his electric de-reg bil, the lowest paid teachers and the highest drop out rate, and the conservatives think this is great. Texas will be BLUE in 2010!