The nations’ economic growth rate slowed larger than estimated and claims for unemployment benefits soared to its highest level since January. Surprisingly, these disappointing reports failed to sting the markets which moved to post more multi-year highs. Markets continued to reap benefits from the positive momentum, gained from the Federal Reserve’s vow to stimulate the economy. Also, positive earnings results chipped in to further strengthen the indices and overshadowed the disappointing data.

The Dow Jones Industrial Average (DJIA) gained 0.6% to settle at 12763.31 and recorded its highest close since May 20, 2008. The Standard & Poor 500 (S&P 500) achieved its highest level since June 9, 2008, at 1360.48, gaining 0.4%. The Nasdaq Composite Index was up 0.1% to finish off at 2872.53, its highest close since Dec. 12, 2000. Additionally, markets were bolstered as the Dow Jones Transportation Average climbed 1.2% to 5,510.06 and recorded an all-time high. The fear-gauge CBOE Volatility Index (VIX) dropped down below 15. For the month, it has averaged a decent 18.60 versus 22.50 that was recorded in the comparable period of last year. On the New York Stock Exchange, for every two stocks that gained, one was on the declining side. Consolidated volumes on the NYSE were 4.2 billion shares.

The Commerce Department, on Thursday, said that the US gross domestic product (GDP) growth rate declined to 1.8% in the first quarter. The GDP growth rate came in lower-than the expected 2.0% after the preceding quarter recorded a rate of 3.1%. This is also the weakest rate of growth since last spring. Inflationary worries, which were largely fueled by higher crude prices, were thought to be the reason behind the declining rate. Higher commodity prices chopped off consumer spending, which expanded at just 2.7%, versus the 4% rise in the preceding quarter.

While inflationary pressures took a toll on GDP, Ben Bernanke, on Wednesday, cited unemployment to be a larger concern than surging commodity prices. The inflationary pressure has taken its cue from soaring crude prices and is expected to be short-lived. Escalating crude prices was a result of the violence in the oil-rich Persian Gulf nations. With the prospect of no such outbreak in near-future, Bernanke sounds logical to suggest that inflation will cool-down, at least in the short-term.

Initial claims for unemployment benefits leaped 25,000 to 429,000 last week and it was at its highest level since January. On the contrary, economists had been expecting the jobless claims to fall to 392,000. Thus, the real worry for the economy is the unemployment rate as the initial claims figure has remained above the 400,000 mark for three straight weeks now. Claims below the 400,000 mark generally suggest steady job growth.

According to the National Association of Realtors, Pending Home Sales increased 5.1% to 94.1, against expectations of a 1.7% increase. The Pending Home Sales Index had increased 2.1% in February to an index value of 89.5. However, the index was 11.4% lower than March 2010, when it was at 106.2 and sales were inconsistent across the country, failing to reflect any recovery in the housing sector.

These disappointing reports could have dented the markets, but luckily for the investors, markets shrugged off these concerns. Earlier, on Wednesday, the Federal Reserve’s statement on monetary policy which reiterated its commitment to keep interest rates low in pursuit of economic growth had pushed the markets higher. Following the Federal Open Market Committee’s meeting, at the first of four annual press briefings, Federal Reserve Chairman Ben Bernanke announced that the FOMC had decided to close the asset purchase on the scheduled date and subsequently freeze the size of its balance sheet. Traders cheered the statements and the strong rally continued yesterday, helping the markets overlook the disappointing data.

Also helping the bullish sentiments were strong corporate earnings results. Sprint Nextel Corp. (NYSE:S), Aetna Inc. (NYSE:AET), The Allstate Corporation (NYSE:ALL) and Citrix Systems, Inc. (NASDAQ:CTXS) all reported strong quarter results and their shares jumped 6.7%, 4.1%, 5.7% and 9.7%, respectively.

However, key stocks in the energy sector were not lucky enough to enjoy the cheer of the broader markets. Exxon Mobil Corporation (NYSE:XOM) reported higher profits but shares fell 0.5% as it failed to beat revenue estimates. Among other decliners in the sector, ConocoPhillips (NYSE:COP), Chevron Corp. (NYSE:CVX), Sunoco, Inc. (NYSE:SUN) and Western Refining Inc. (NYSE:WNR) dropped 3.0%, 0.2%, 0.9% and 3.2%, respectively.

Significant companies scheduled to report their earnings results today include Caterpillar Inc., Chevron Corp. and Merck & Co. Inc.

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