U.S. stocks rallied Wednesday, extending gains from the previous trading day, as an unexpected cut of the U.S. gross domestic product (GDP) for the first quarter of the year eased worries that the Federal Reserve may wind down its monetary stimulus of bond purchases soon.

In midday trading, the Dow Jones Industrial Average gained 80. 18 points, or 0.54 percent, to 14,840.49 points. The Standard & Poor's 500-stock Index rose 8.78 points, or 0.55 percent, to 1,596. 81 points. The Nasdaq Composite Index added 19.41 points, or 0.58 percent, to 3,367.30 points.

The economy of the United States grew at an annual rate of 1.8 percent in the January-March period, well below the expectations for 2.4 percent growth, according to the final reading on GDP released by the U.S. Commerce Department Wednesday.

"A substantial revision to GDP in the third and final first quarter release was unexpected. The mix of growth was worse there was almost no change in inventories and consumption was the most heavily revised of the components," FTN Financial Chief Economist Christopher Low commented in a note.

Other data showed U.S. mortgage applications for the week ending June 21 decreased 3.0 percent from the previous week to the lowest level since November 2011, the Mortgage Bankers Association's weekly survey showed.

The attempts of the People's Bank of China, the country's central bank, to ease the credit crunch in China also gave more relief to investors and global markets. The PBOC said in a statement late Tuesday that to ensure the stability of the currency market, it has provided liquidity support for some financial institutions that meet macro-prudential requirements.

European stocks closed sharply higher Wednesday, also adding to the positive market sentiment, as a report released by market research institution GfK showed that German consumer confidence jumped to the highest level in nearly six years.

Also, Minneapolis Fed President Narayana Kocherlakota said Wednesday morning on CNBC that spiking U.S. bond yields and stock market swings to the Fed's taper talk have been "outsized."

Source: Xinhuanet