Stocks Roar Ahead as Report Shows Economic Muscle
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Friday, August 29, 2008; Page D05
NEW YORK, Aug. 28 -- Wall Street barreled higher Thursday after a better-than-expected reading on gross domestic product and a drop in jobless claims gave investors some reassurance that the economy is holding up.
A decline in oil prices also appeared to add force to the rally in stocks. But trading volume was again light heading toward the Labor Day weekend, a condition that can magnify price moves.
The Dow Jones industrial average rose 212.67, or 1.85 percent, to 11,715.18, bringing its three-day advance to nearly 330 points. The broader Standard & Poor's 500-stock index advanced 19.02, or 1.48 percent, to 1300.68, and the Nasdaq composite index rose 29.18, or 1.22 percent, to 2411.64.
The Commerce Department's report that gross domestic product rose at an annual rate of 3.3 percent for the April-June quarter followed several economic readings this week that have left investors somewhat optimistic. The weaker dollar helped boost U.S. exports, which pushed GDP growth beyond the government's initial estimate of 1.9 percent, as well as economists' forecast of 2.7 percent.
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 for signs that growth is picking up after being pounded by housing woes and a debilitating credit crisis.
Also Thursday, the Labor Department said that the number of newly laid off people seeking jobless benefits fell for the third straight week. Claims dropped to a seasonally adjusted 425,000, down 10,000 from the previous week.
"This is an environment in which we're likely to get a lot of head fakes both on the upside and the downside," said Bill Urban of Bingham, Osborn & Scarborough, referring to economic data. He noted that the initial reading on the fourth quarter last year had been positive before revisions revealed that the economy contracted. "We don't yet think it signals a trend," he said.
Light, sweet crude fell $2.56 to settle at $115.59 on the New York Mercantile Exchange.
Movers
Fannie Mae gained $1.47, to $7.95.
Freddie Mac rose 53 cents, to $5.28.
Devon Energy fell $3.62, to $103.16.
