NEW YORK — Stocks rose Friday and bond prices fell after the government reported that U.S. economic growth didn’t slow down as much as feared.
Stocks stumbled briefly but then recovered after Intel Corp. issued a revenue warning and Federal Reserve Chairman Ben Bernanke didn’t offer any concrete new steps for stimulating the economy.
The downward revision in second-quarter economic growth was steep, but not quite as bad as economists expected. That helped encourage investors to take money out of safe investments like Treasurys and put it to work in the stock market.
The Commerce Department reported that gross domestic product grew at a 1.6 percent rate in the April-to-June period. That’s still way down from its earlier estimate of 2.4 percent but not as bad as the 1.4 percent expected by economists.
Shares of Intel were halted as the chip giant said it would miss analysts’ revenue expectations for the current quarter, but there too the news wasn’t as bad as it could have been. Intel’s shares edged higher after resuming trading since the company’s new forecast wasn’t as bad as the worst estimates circulating among analysts.
Overall, it was a day of bad news that could have been worse.
“These are terrible numbers,” Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh, said of the lower GDP revision. “But they weren’t frighteningly horrible.”
The Dow Jones industrial average rose 122.70, or 1.2 percent, to 10,107.51 in morning trading. The Standard & Poor’s 500 Index rose 12.33 or 1.2 percent, to 1,059.55 and the Nasdaq composite index rose 20.82, or 1.0 percent, to 2,129.51.
Rising stocks outnumbered falling ones five to one on the New York Stock Exchange, where volume came to 350 million shares.
The yield on the 10-year Treasury note rose to 2.58 percent, above the 2.50 percent it was trading at before the GDP numbers came out. Its price fell 81.25 cents to $100.406. Bond yields rise when their prices fall.
The Dow closed below 10,000 Thursday, the first time since early July that it finished under that milestone. Investors have been generally pessimistic about the economy in the past few weeks, but stock moves have also been skewed because many traders are on vacation.
The upturn in stocks on Friday marked an improvement in sentiment from much of August. Stocks have been mainly falling this month on a series of weak indicators on the economy, including home sales.
Bernanke, who was giving a speech at the central bank’s annual conference, repeated his assessment that the U.S. economic recovery remains fragile, but he also didn’t downgrade his already cautious view. Investors have been on edge about the economy in recent weeks, and some fear that in the worst case the U.S. economy could slip back into recession, something economists call a “double-dip.”
“The market had been bracing for Bernanke to say that a double-dip is imminent or at least he would downgrade the economy,” said Quincy Krosby, market strategist for Prudential Financial.
Traders were also encouraged to see that a bidding war between computer makers Dell Inc. and Hewlett-Packard Co. was heating up over the data-storage company 3Par Inc. Early Friday HP boosted its bid for 3Par to $1.88 billion, topping Dell’s latest offer by 11 percent.
3Par shares rose $5.57 to $31.60, slightly above HP’s latest offer of $30 per share, in a sign that investors are hopeful for another counteroffer from Dell. Dell’s initial bid for 3Par last week was $18 per share.
Intel was up 2 cents at $18.20 in morning trading.