US open: Stocks gain after US GDP beats forecasts

US stocks gained on Friday after a better-than-expected gross domestic product report.

At 1445 BST the Dow Jones Industrial Average rose 0.12%, the S&P 500 increased 018% and the Nasdaq grew 0.17%.

The Commerce Department’s second estimate of first quarter US gross domestic product was for a 0.8% rise at a seasonally-adjusted rate, up from the initial estimate of 0.5% but a touch below expectations of 0.9%.

Meanwhile, consumer spending was up 1.9%, in line with the initial estimate and outlays on new home construction rose at a rate of 17.1% compared to an initial estimate of 14.8%.

Pantheon Macroeconomics said: “Overall, these data don't materially change our view that second quarter growth will be 3% or better, and they don't fix the very long running statistical problem which tends to depress first quarter GDP growth relative to the trend.

"This, presumably, is why the April FOMC minutes showed that "most" participants believed growth "had likely not deteriorated as much as was suggested by the recent data on spending and production". In other words, when they said they wanted to see evidence of a rebound in Q2, they were pretty sure they would get it.”

Federal Reserve chair Janet Yellen is due to give a speech at Harvard at 1530 BST, which investors will be scrutinising for any further clues on the timing of the next interest rate hike.

However, Societe Generale expects there to be little emphasis on the monetary policy outlook at the event.

“The appearance to look forward to will be the Chair’s speech in Philadelphia on June 6, the Monday following the May employment report and a day before entering the blackout period for the upcoming FOMC meeting,” the French bank said.

In commodities, oil prices were under the cosh as supply glut concerns persisted. West Texas Intermediate crude fell 1.16% to $48.91 per barrel and Brent dropped 1.7% to $48.76 per barrel at 1456 BST.

In corporate news, Ulta Salon Cosmetics & Fragrance jumped after releasing better-than-expected first-quarter results.

Valeant Pharmaceuticals was also on the front foot after saying it had rejected a takeover approach from Takeda Pharmaceutical and TPG.

In currencies, the dollar rose 0.22% against the pound, increased 0.40% against the euro and fell 0.04% versus the yen.