WASHINGTON (AP) -- It's another instance in which some bad economic news is being welcomed on Wall Street.
Stocks have surged today for a second day, even after the government reported that the U.S. economy grew at a much slower rate in the first quarter of the year than had been thought. The Commerce Department revised downward its estimate of growth for the quarter -- from a 2.4 percent annual rate to 1.8 percent.
The news might affect the timing of the Federal Reserve's plan to scale back its bond-buying program. Fed Chairman Ben Bernanke said last week that the purchases would probably start to slow down later this year, and would end next year, if the economy keeps getting stronger.
Jennifer Lee, a senior economist at BMO Capital Markets, says the Fed won't scale back the program based on the kind of numbers that were reported today. She says, "They need convincing signs of a pickup." She notes that the economy barely grew in the final quarter of last year -- and that if the current quarter is as weak as some analysts expect, the Fed will be looking at three quarters of sub-par growth.
155-w-31-(David Melendy, AP correspondent, with Tim Quinlan, economist, Wells Fargo Securities)--The economy grew at a much slower pace than previously thought in the January-to-March quarter. AP correspondent David Melendy has more. (26 Jun 2013)