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Wall Street jumps as GDP growth spurs optimism
2009-10-29
NEW YORK (Reuters) - U.S. stocks logged their best one-day percentage gain in three months on Thursday as investors saw data showing the U.S. economy returned to growth in the third quarter as brightening the outlook for profits. The government's first estimate of U.S. gross domestic product showed the economy expanded at an annual rate of 3.5 percent in the third quarter, suggesting it was emerging from the worst recession in 70 years. The quarter of growth was the first after more than a year of contraction in GDP. For details, see [ID:nN29354547] Equity gains were widespread, with big manufacturers, technology, financials, energy and the materials sectors all benefiting. The S&P 500 and the Nasdaq halted a four-day rout. Sentiment was also boosted by stronger-than-expected quarterly results from consumer product heavyweights Procter & Gamble Co (PG.N) and Colgate-Palmolive Co (CL.N). The GDP report served as more affirmation of investors' recent bets on the recovery, which fueled a sharp advance from the 12-year lows of early March. "We see today that the optimism about corporate earnings reports is just being confirmed in the GDP report," said Kenneth Kamen, president of Mercadien Asset Management in Hamilton, New Jersey. "We are starting to see the economy really recover and GDP picking up." The Dow Jones industrial average (.DJI) gained 199.89 points, or 2.05 percent, to end at 9,962.58. The Standard & Poor's 500 Index (.SPX) jumped 23.48 points, or 2.25 percent, to 1,066.11 -- marking its biggest one-day percentage gain in three months. The Nasdaq Composite Index (.IXIC) shot up 37.94 points, or 1.84 percent, to close at 2,097.55. FEAR FACTOR FADES Weakness in the U.S. dollar also underpinned Thursday's stock action as the appetite for riskier assets resurfaced. The CBOE Volatility Index (.VIX), Wall Street's most closely watched gauge of investor fear, slid 11.3 percent, its biggest one-day percentage drop in eight months. Economists in a Reuters poll last week expected GDP to gain 3.3 percent, although some recent data led many to trim forecasts this week. Shares of Dow component P&G, which also raised its full-year revenue outlook, gained 4 percent to $59.54, while Colgate-Palmolive shares rose 1.6 percent to $78.94. The S&P consumer staples index (.GSPS) gained 1.8 percent. Caterpillar Inc (CAT.N), whose products include bulldozers and excavators, rose 5.2 percent to $57.25, as shares of aircraft maker Boeing Co (BA.N) rose 3.4 percent to $48.81. iPhone maker Apple Inc (AAPL.O) rose 2.1 percent to $196.35 on Nasdaq, where Symantec Corp (SYMC.O) jumped 12.8 percent to $17.74, a day after the business software maker posted a quarterly profit that eclipsed Wall Street's forecasts. Several brokerages raised price targets on Symantec. Higher oil prices contributed to the energy sector's gains, with the S&P energy index (.GSPE) up 2.4 percent. Chevron Corp (CVX.N) gained 2.7 percent to $77.95 ahead of its quarterly results on Friday. Exxon Mobil Corp (XOM.N) edged up 0.2 percent to $73.96, but the stock spent most of the session in negative territory following the company's report of a third-quarter profit below expectations. Even with the optimism inspired by the latest GDP report, other money managers said there was still reason to be cautious as the recovery might prove bumpy. "We are in the early stages of a recovery process," said Les Satlow, portfolio manager at Cabot Money Management in Salem, Massachusetts. "It's a very good thing that GDP is growing quarter-on-quarter, but if this is a V-shaped recovery we are still well below the top left of the V." Data from the Labor Department showed that the number of U.S. workers filing new claims for jobless benefits fell last week, though not by as much as expected. The S&P 500 is up 57.6 percent from its 12-year closing low of March 9. With just one trading day left in the month, the S&P 500 is up 0.9 percent. But the benchmark S&P is off 2.9 percent from its post-March peak reached on October 19. Volume was moderate on the New York Stock Exchange, with about 1.46 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.34 billion shares traded, above last year's daily average of 2.28 billion. Advancers beat decliners by a ratio of nearly 5 to 1 on the NYSE, while on the Nasdaq, more than two stocks rose for every one that fell. (Editing by Jan Paschal)
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