Updated at 12:15 p.m. ET: Stocks rose Friday, driving the Dow Jones industrial average climbing above 13,000, following a report on economic growth which met expectations, and on renewed hopes for further stimulus from the Federal Reserve and the European Central Bank.
Economic growth slowed as expected in the second quarter as consumers spent at their most sluggish pace in a year. The figure was better than investors' worse fears but still weak enough to potentially push the Federal Reserve closer to pumping more money into the economy.
"The Fed's concern and mandate is employment. Annualized GDP growth at 1.5 percent cannot begin to mend the unemployment picture," said Joseph Trevisani, chief market strategist at Worldwide markets in Woodcliff Lake, New Jersey. "Mr. Bernanke and company have all the rationale they need to open the liquidity spigot."
Stocks leapt nearly 2 percent on Thursday, erasing much of their losses for the week, as ECB chief Mario Draghi said he would do whatever it takes to save the euro. That followed a story in the Wall Street Journal Wednesday which was widely seen as heralding a new round of stimulus from the Fed.
Optimism over further stimulus measures have helped offset a mixed corporate earnings season, with many companies beating profit forecasts but often missing revenue projections and warning about sluggish global growth.
As of Thursday, about half of S&P 500 companies have reported earnings. Of those, about two thirds have beat profit forecasts. Three in five, however, have missed Wall Street's revenue projections, according to Thomson Reuters data.
Both Facebook and Starbucks tumbled after their earnings reports disappointed investors.
Facebook Inc reported a drastic slowdown in revenue growth on Thursday and failed to offer financial forecasts that quelled fears about its ability to boost advertising growth, sending its shares plummeting to a record low.
Starbucks Corp cut its outlook for the current quarter, citing global economic weakness and a recent slowdown in visits in the United States, its biggest market for sales and profits.
Merck & Co reported better-than-expected quarterly earnings on Friday, despite the negative impact of the stronger dollar, with strong sales growth of its vaccines and treatments for diabetes and HIV.
Reuters contributed to this report.
