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NEW YORK (CNNMoney)
U.S. stocks rose sharply Wednesday as investors bet the weak GDP reading would keep the Fed's stimulus going.
The Dow Jones industrial average jumped more than 100 points, or 0.8%. The S&P 500 and Nasdaq gained 0.7%.
Markets have been volatility lately, driven largely by fears that the Federal Reserve could begin to ease its stimulus measures by the end of the year.
But those fears took a backseat following the Commerce Department's worse-than-expected report on first-quarter gross domestic product, which showed the economy grew just 1.8% during the first quarter. The prior estimate showed an annual increase of 2.4%, and economists were expecting that figure to hold.
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"There is a clear disconnect from what the Fed is reviewing and Main Street is living," said Todd Schoenberger, managing partner at LandColt Capital, in a client note. "The pathetic part of it all is Wall Street will see this as good news as stocks will most likely rally on hopes of an extended period for more bond buying."
Related: The Fed may kill bank stocks
Gold slumps: Gold prices fell more than 4% to to a 34-month low of $1,223.20 an ounce, before trimming some of those losses.
Gold has been dragged down by the market rout accompanying Fed chairman Ben Bernanke's comments about potentially pulling back on bond buying later this year.
Gold mining companies Randgold Resources (GOLD) and Barrick Gold (ABX)fell 4% in early trading. The SPDR Gold Shares Trust (GLD) ETF fell 3%.
Related: Fear & Greed Index continues to show extreme greed
In corporate news, shares of Smith & Wesson (SWHC) declined even after the gunmaker issued earnings and sales guidance well above forecasts.
General Mills (GIS, Fortune 500) slipped after the food company reported earnings in line with forecasts but a weak guidance for the year.
Shares of Apollo Group (APOL), which owns for-profit University of Phoenix, slid after the company reporting disappointing quarterly profits.
Monsanto (MON, Fortune 500) reported better-than-expected earnings and reiterated its outlook, but shares turned lower. Bed Bath & Beyond (BBBY, Fortune 500) will report after the markets close.
Pandora (P) shares gained ground after analysts at Cowen and Co. upgraded the company's shares to outperform.
European markets were gaining traction in afternoon trading, led by the CAC 40 in Paris, which rose nearly 2%.
Asian markets ended with mixed results. The Shanghai Composite index dipped by 0.4%. Hong Kong's Hang Seng rebounded throughout the day, closing with a nearly 2.5% gain. The Nikkei in Japan ended with a 1% loss.
First Published: June 26, 2013: 9:57 AM ET
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