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CNBC ON DIGG

Dow Up About 200—1st Time Since July

Published: Thursday, 29 Oct 2009 | 3:14 PM ET

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By: Cindy Perman
CNBC.com

Stocks rallied Thursday, rebounding off of the prior session's rout, after reports showed the economy grew more than expected last quarter and jobless claims fell.

In the final hour of trading, the Dow Jones Industrial Average was up more than 200 points, the first time it's been up that much since July. The Nasdaq, which has been beaten down lately, jumped 2 percent, and the S&P 500 gained more than 2 percent.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

Alcoa [AA Loading... () ] and Procter & Gamble [PG Loading... () ] were among the biggest Dow gainers, while Merck [MRK Loading... () ], ExxonMobil [XOM Loading... () ] and one of the prior session's leaders, AT&T [T Loading... () ], were the biggest drags on the Dow.

The much-anticipated government report on gross domestic product delivered on hopes that the economy was back in positive territory following a crippling recession: The economy grew at a 3.5 percent clip in the third quarter, ahead of even the healthiest expectations.

At the same time, weekly jobless claims fell and the four-week moving average, widely considered a more accurate barometer of the employment picture, pulled back even more sharply.

FOR INVESTORS

However, economists suggest the third quarter may be as good as it gets and growth may taper in the fourth quarter and into 2010.

"The expansion in Q3 GDP (3.5%) shows we have clearly begun to emerge from the trough," Bart van Ark, chief economist of The Conference Board, wrote in a note following the report. "But there’s still a long way to go," he said, "and we still don’t know enough about the sustainability of these recovery signals."

Another round of positive earnings results helped buoy the market: Procter & Gamble and Motorola [MOT Loading... () ] both delivered better-than-expected results that sent their shares higher.

On the downside, ExxonMobil [XOM Loading... () ] disappointed the market with earnings per share of 98 cents, 5 cents below expectation, as oil prices were down sharply from a year earlier and fuel demand waned.