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.
The Dow Jones Industrial Average was up about 80 points, or 0.9 percent, in morning trading. The Nasdaq, which has been beaten down lately, jumped over 1 percent, as did the S&P 500.
Alcoa and Procter & Gamble led the Dow, while Merck , ExxonMobil and one of the prior session's leaders, AT&T , 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.
However, economists suggest the third quarter may be as good as it getsand 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 both delivered better-than-expected resultsthat sent their shares higher.
On the downside, ExxonMobildisappointed 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.
The dollar pulled backafter gaining on Wednesday. Oil prices rose to about $79 a barrel. Gold jumped about $8.
Financials rebounded, after being among the biggest decliners in the prior session. Citigroup jumped about 4 percent; Dow components Bank of America and JPMorgan were up more than 2 percent.
In Washington, some surprising comments from the Treasury Secretary. In testimony before a House panel, Tim Geithner said the Federal Reserve should lose its authority to bail out big financial firms like AIG and Bear Stearns, but should remain the lender of last resort.
And Democrats are unveiling the House plan for health-care reform today.
Other events on the calendar today include a speech by National Economic Council director Lawrence Summers in New York at 12:15 pm New York time, and a $31 billion dollar auction of 7-year Treasury notes, with results available shortly after 1pm.
Still to Come:
THURSDAY: 80th anniversary of 1929 market crash; Larry Summers speaks in NYC
FRIDAY: Personal income and spending; consumer sentiment; Earnings from Chevron
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