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US stocks rally for second consecutive day on revised GDP, Syria

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US stocks rally for second consecutive day on revised GDP, Syria

Stocks rallied for a second consecutive day after revised GDP figures showed the US economy expanded faster than initial forecasts. Gross domestic product, which is the value of all goods and services produced in the economy, advanced 2.5 percent in the second quarter, up from last month’s initial estimate of 1.7 percent.

Thursday’s revised figures provide investors with added assurance economic recovery is headed in the right direction, and why the markets should be more comfortable with a Federal Reserve bond taper. Speculation about the pace and timing of a Fed taper have dominated the financial markets for the balance of the summer, and has resulted in multiple broad sell-offs for US equities.

The benchmark indices responded positively to the revised GDP figures. The Standard & Poor’s 500 gained 0.2 percent to 1,638.17. Trading volume in the S&P 500 was 20 percent lower than the 30-day average, a trend not unexpected as we approach the Labor Day weekend. The Dow Jones Industrial Average advanced more than 0.1 percent to 14,841.00. The NASDAQ Composite posted the biggest gains, advancing three quarters of a percent to 3,620.30.

Accentuating the market’s rebound was diminishing concern over a potential confrontation with Syria. Expectations for a Syria strike receded as UK Prime Minister David Cameron struggled to win parliamentary assent for military strikes. The lack of parliamentary backing coincides with Britain’s latest assessment of the chemical attack, which concurred with the recent UN investigation insisting Assad’s government wasn’t responsible for the mass killings. While the United States still maintains it has evidence Assad’s forces were responsible, it wouldn’t act without the support of its allies, according to Defense Secretary Chuck Hagel.

With Syria now posing only a short-term risk, market participants have shifted their focus back toward economic data. The United States will close out the week with reports on personal consumption and consumer sentiment.

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