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By Carlos Guillen

Yesterday, the Dow Jones Industrial Average was up over 100 points, fueled by People's Bank of China (PBOC) bringing relief to many that feared a liquidity crunch in the world's second largest economy, and today the Dow is up in the triple digits once again as investors become more confident that the Fed here at home will not take away the punch bowl. Equity markets are surprisingly doing well today despite economic data showing that the U.S. produced less than expected in the first quarter.

Clearly a negative surprise today was that according to the Bureau of Economic Analysis, real gross domestic product (OTC:GDP) during the first quarter of 2013 increased quarter-over-quarter by 1.8 percent (annualized), worse than the Street's consensus estimate calling for a 2.5 percent quarter-over-quarter rise and much lower than the second estimate of 2.4 percent, but still higher than the 0.4 percent achieved in the fourth quarter of 2012. It was quite surprising that consumption increased 2.6 percent, revised down from 3.4 percent, which was mostly the result of lower growth in services that was revised lower from 3.1 to 1.7 percent. Private sector investment also had an effect in the lower GDP final result as gross private domestic investment grew 7.4 percent, down from the prior estimate of 9.0 percent. On a positive note, the first quarter still marks the thirteenth quarter of month-to-month GDP growth.

On the inflation side, prices for GDP increased by 1.2 percent (annualized), matching economists' average forecast. The combination of slower than expected economic growth and the tepid rise in prices will certainly serve to give the Fed the impetus it needs to maintain its loose monetary policy trajectory, and investors' fears about Fed tapering have been soothed for the time being, helping to give stock markets a nice boost today.