US stocks edged higher yesterday as investors continued to find value in equities over other asset classes despite the latest economic data coming in below expectations.
The US economy contracted 2.9 per cent in the first quarter, a much steeper pace than previously estimated, though activity was impacted by harsh winter weather and there are indications that growth has since rebounded.
In another negative data point, orders for durable goods unexpectedly fell 1 per cent in May.
Futures initially fell on the news but Wall Street showed signs of strength in early trading. The S&P 500 and Dow remain within striking distance of record levels.
“As long as investors believe the economy will keep growing, and everyone expects growth in the second quarter, the lesser evil will be to buy equities at a modestly higher valuation, since bonds and cash don’t represent better values,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
