U.S. Stocks Ease Off Their Early Highs

Stocks in the U.S. edged off their opening highs but were staying positive Thursday morning, as a decline in third-quarter GDP was narrower than expected and companies issued a heap of quarterly earnings statements.

The Dow Jones Industrial Average was up 69 points to 9060, and the S&P 500 added 11 points to 941. TheNasdaq jumped 20 points to 1678.

Ahead of Thursday's session, the Department of Commerce reported that GDP contracted 0.3% in the third quarter, providing a strong indication that the U.S. has entered a recession. The decline was narrower than expected by economists but down from growth of 2.8% in the second quarter.

"If you'd been wondering if there was recession, this kind of brings it home," said Phil Dow, director of equity strategy at RBC Dain Rauscher. He said that a recession normally has been ongoing by the time the government says there is one, and that he thinks going forward the U.S. will see a two-quarter recession followed by modest growth.

"We shouldn't look for perfection in these estimates," said Dow. "It's pretty easy to get in a black mood and think that this is going to extend forever."

As for the GDP number's impact on stocks, "Normally you have the stock market recover even when it's cloudy," said Dow, and he said the market feels like it's close to an interesting bottom in pricing.

Steven Wieting, economist at Citigroup, wrote in an email that consumer spending for the third quarter dropped 3.1%, the biggest drop since 1980. Declines in production and employment, coupled with tight credit markets and wealth destruction indicate that GDP may decline more than 3% for the fourth quarter, he wrote.