Now teasing the 10,000 mark at 9,952, up 190 points.
NEW YORK (AP) — Stocks rose sharply Thursday morning after the
government said the economy grew at a stronger than expected pace
during the third quarter.
Investors have spent the past couple of months hunting for clues of
just how much the economy has recovered. Thursday’s gross domestic
product reading gave them the surest sign yet that the economy is
on the upswing.
The Commerce Department said the economy grew at an annual pace of
3.5 percent in the third quarter, faster than the 3.3 percent
increase predicted by economists polled by Thomson Reuters.
The growth was the best in two years and stops four consecutive
quarters of declines that had pushed the economy into its worst
recession since the Great Depression.
Growth was bolstered by government stimulus programs, including the
popular Cash for Clunkers auto program and tax credits for
first-time home buyers.
In early morning trading, the Dow Jones industrial average rose
66.27, or 0.7 percent, to 9,828.96. The Standard & Poor’s 500 index
rose 8.99, or 0.9 percent, to 1,051.62, while the Nasdaq composite
index rose 20.20, or 1 percent, to 2,079.81.
Mitch Schlesinger, a managing partner at FBB Capital Partners in
Bethesda, Md., said that because of government support,
fourth-quarter GDP should provide a better picture of how much the
economy has recovered.
“Some of the artificial goosing of the numbers will come out and
we’ll get a better picture,” Schlesinger said. He added that the
economy is likely to grow in the fourth quarter, but probably not
at as fast a pace as the third quarter.
In the interim, however, investors will welcome the
better-than-expected third quarter report, he said.
Investors were also pleased by the Labor Department’s report that
people receiving unemployment benefits on an ongoing basis dropped
sharply by 148,000 to 5.8 million, below economists’
expectations.
Workers filing first-time claims for unemployment dipped 1,000 to a
seasonally-adjusted 530,000 last week. Economists expected a larger
decline to 521,000.
Stocks are rebounding after being pummeled for the third straight
day on Wednesday. A disappointing report on sales of new homes
helped ignite worries about the pace of a recovery.
