US stocks rise despite weak GDP

New York - US stocks finished higher on Wednesday despite a US Commerce Department report that showed first-quarter economic activity contracted much more than previously thought.

The Dow Jones Industrial Average advanced 49.38 points (0.29%) to 16 867.51.

The broad-based S&P 500 rose 9.55 (0.49%) to 1 959.53, while the tech-rich Nasdaq Composite Index jumped 29.40 (0.68%) to 4 379.76.

US gross domestic product fell at a 2.9% annual pace in the first three months of 2014, much worse than the previous estimate of 1.0% and the sharpest decline in five years.

The drop reflected weaker growth in consumer spending, a larger increase in exports and higher imports than previous estimates.

Analysts said the market essentially saw beyond the report, regarding it as backward-looking as more recent data shows growth picking up.

"Everybody in the investing world knows the winter was harsh, but it's in the rear-view mirror," said Bill Lynch, director of investment at Hinsdale Associates.

"The market is looking forward."

Broadcasters and cable companies gained after the US Supreme Court ruled that online television startup Aereo violated copyright laws by retransmitting broadcasts through antenna equipment. The court ruled Aereo effectively operates like a cable company and must therefore pay for broadcast rights.

CBS rose 6.2%, Twenty-First Century Fox gained 2.0%, Comcast rose 1.1% and Time Warner Cable 1.3%.

Oil refiners slumped after the US issued permits to two companies to export unrefined oil for the first time in four decades, potentially threatening domestic refining margins.

Marathon Petroleum fell 6.3%, Phillips 66 lost 4.2%, and Valero Energy dropped 8.3%t.

General Mills fell 3.6% as fiscal fourth-quarter earnings came in at 65 cents per share, far below the 72c projected by analysts. General Mills said promotional spending in developed markets was "less effective than we planned and input cost inflation was a bit above our forecast".

Agrotech leader Monsanto jumped 5.1% as third-quarter profits of 1.62 per share bested expectations by 6c. The company lifted its long-term profit targets and announced a $10bn share repurchase plan.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.56% from 2.59% on Tuesday, while the 30-year dropped to 3.38% from 3.41%. Bond prices and yields move inversely.