Stocks jump on better-than-expected GDP, jobs data
A decline in oil prices also appeared to add force to the rally in stocks. But volume was again light heading toward the Labor Day weekend, helping to exaggerate price moves.
The Commerce Department's report that gross domestic product rose at an annual rate of 3.3 percent for the April-June period helped punctuate a week of generally upbeat economic readings that have left guarded investors somewhat optimistic. The weaker dollar that helped boost U.S. exports pushed GDP growth beyond the government's initial estimate of a 1.9 percent as well as economists' forecast of 2.7 percent.
The increase came as the government handed out rebate checks to taxpayers. It marked the economy's best performance since the third quarter of last year, when GDP rose at a 4.8 percent pace.
Investors are watching GDP, the best barometer of the economy's well-being, to look for signs that growth is picking up after being pounded by housing woes and a debilitating credit crisis. The economy grew at a weak rate of 0.9 percent in the first quarter and actually shrank in the last three months of 2007.
But some economists consider claims above 400,000 an indicator of a slowing economy. Companies have cut jobs every month this year as they grapple with rising energy costs and tighter credit.
"We didn't get a whole lot of new information," said Charlie Smith, chief investment officer at Fort Pitt Capital Group in Pittsburgh, referring to the reports. He noted that volume was light.
"Exaggerated reactions tend to happen when you have thin trading," he said.
In midafternoon trading, the Dow rose 190.20, or 1.65 percent, to 11,692.71 after rising more than 115 points over the past two sessions following better-than-expected reading on consumer confidence and manufacturing. Still, for the week, stocks are essentially flat after a big decline Monday on credit worries.
Broader stock indicators also rose. The Standard & Poor's 500 index advanced 16.13, or 1.26 percent, to 1,297.79, and the Nasdaq composite index rose 28.84, or 1.21 percent, to 2,411.30.
Bonds fell as investors moved into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.79 percent from 3.77 percent late Wednesday. The dollar rose against other major currencies, as did gold prices.
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