Stocks rallied sharply Friday, with the Dow gaining 172 points on better-than-expected gross domestic product (GDP) growth last quarter...
NEW YORK — Stocks rallied sharply Friday, with the Dow gaining 172 points on better-than-expected gross domestic product (GDP) growth last quarter despite the disruptions caused by hurricanes Katrina and Rita. The major indexes finished an erratic week higher.
The Dow Jones industrial average jumped 172.82 to 10,402.77, its biggest one-day gain since April 21. For the week, the Dow added 1.84 percent.
Microsoft, one of the 30 Dow stocks, gained 68 cents Friday to close at $25.53 a share, up 3 percent for the week. Boeing, also a Dow stock, advanced $1.59 Friday to $65.64, but was down 0.6 percent for the week.
Broader stock indicators were also higher Friday. The Standard & Poor’s 500 index gained 19.51 to 1,198.41, up 1.6 percent for the week. The Nasdaq composite index climbed 26.07 Friday to 2,089.88, and finished 0.37 percent higher for the week.
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The upswing in economic activity for the July-September quarter soothed a market anxious for signs of the economy’s health amid fears of a downturn. The GDP figure also overshadowed a drop in consumer confidence and a weak forecast from oil company Chevron.
“It basically drove home the point that the economy was healthy before the hurricanes and indeed may have remained healthy afterward as well,” said Doug Porter, a senior economist at BMO Nesbitt Burns, who noted gains in spending and business investment among increases in nearly every GDP component in the Commerce Department’s report.
Wall Street closed out a week of volatile trading as investors juggled mixed corporate earnings reports and renewed interest-rate worries following the nomination of top White House economist Ben Bernanke as the next Federal Reserve chief.
Bernanke, who would replace outgoing Chairman Alan Greenspan in January, is largely expected to keep the Fed’s mission of clamping inflation by slowly lifting interest rates and curbing demand. But with oil and gas prices now retreating from record levels, many fear the Fed may go overboard and send the economy sliding.
Friday’s positive GDP report gave investors a brighter economic picture. The Commerce Department said the economy grew 3.8 percent in the third quarter, besting economists’ forecast for a 3.6 percent gain and the 3.3 percent advance for the April-June period.
That growth helped the market look past weakening consumer confidence after the University of Michigan reported its consumer sentiment index for October sank 1.2 points to 74.2, below views for an increase to 76.
Mike Viracola, managing director at Adams Harkness, also attributed this week’s volatility to stock-specific moves as traders look to boost returns before year-end.
“I don’t think [investors] are getting that much from the individual earnings reports, causing them to switch gears” in their long-term positions, Viracola said.