July 27 - Summary of business headlines: Stocks rally on Wall Street and Europe on hopes of new central bank stimulus; U.S. economic growth slows to low of the year; Economy taking a toll on maternity ward; Facebook down 38 percent from IPO. Conway G. Gittens reports.
PLEASE NOTE THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL The Dow closed above 13,000 for the first time since May as slower economic growth fuels hope the Federal Reserve will soon step in. Blue chips surged 187 points and the rest of the market was up nearly 2 percent; making for a three-week rally for the Dow and a two-week rise for the Nasdaq. The U.S. economy grew at an expected rate of 1.5 percent in the second quarter, the slowest growth this year. Consumer spending slowed down as shoppers pulled back on autos and other big-ticket items. And there's reason there to be concerned, consumer sentiment this month fell to the lowest of the year. Expectations are rising the Fed will come in with more stimulus via quantitative easing, but not necessarily at next week's two-day meeting, says Jefferies Chief Financial Economist Ward McCarthy. SOUNDBITE: WARD MCCARTHY, CHIEF FINANCIAL ECONOMIST, JEFFERIES (ENGLISH) SAYING: "I think they will do another QE by the end of the year and I think you are going to start to see some discussion at the Fed and other places about doing an open ended QE that is not putting a dollar number on it, but saying that they are going to continue to buy securities until they get certain developments in the economy that make them convinced that the economy and growth are sustainable." The weak economy is having unexpected consequences. Fewer Americans are choosing to have babies. The birthrate expected to hit a 25-year low this year, and further declines are likely in the years to come, according to research company Demographic Intelligence. Their report says the birth rate has been falling steadily since the 2007 financial crisis. Facebook has a lot of work to do. Shares hit a post-IPO low, falling 38 percent from the $38 IPO price. Investors were looking for more guidance from the social network when results were released the day before. Finally, Europe is gearing up for central bank meetings next week; stocks finished higher. Conway Gittens, Reuters