US market closes higher
US market closes higher on the back of good third quarter numbers. Chris Thompson reports.
US stocks logged their best one-day percentage gain in three months overnight as investors saw data showing the US economy returned to growth in the third quarter as brightening the outlook for profits.
The government's first estimate of US gross domestic product showed the economy expanded at an annual rate of 3.5 per cent 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.
Equity gains were widespread, with big manufacturers, technology, financials, energy and the materials sectors all benefiting. Both 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 and Colgate-Palmolive Co.
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 gained 199.89 points, or 2.05 per cent, to 9962.58. The Standard & Poor's 500 Index jumped 23.48 points, or 2.25 per cent, to 1066.11 -- marking its biggest one-day percentage gain in three months. The Nasdaq Composite Index shot up 37.94 points, or 1.84 per cent, to close at 2097.55.
Weakness in the US dollar also underpinned Thursday's stock action as the appetite for riskier assets resurfaced.
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 per cent to $US59.54, while Colgate-Palmolive shares rose 1.6 per cent to $US78.94. The S&P consumer staples index gained 1.8 per cent.
Caterpillar Inc, whose products include bulldozers and excavators, rose 5.2 per cent to $US57.25, as shares of aircraft maker Boeing Co rose 3.4 per cent to $US48.81.
iPhone maker Apple Inc rose 2.1 per cent to $US196.35 on Nasdaq, where Symantec Corp jumped 12.8 per cent to $US17.74, 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 up 2.4 per cent. Chevron Corp gained 2.7 per cent to $US77.95 ahead of its quarterly results on Friday.
Exxon Mobil Corp edged up 0.2 per cent to $US73.96, 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 Labour Department showed that the number of US 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 per cent from its 12-year closing low of March 9. It has shed 2.9 per cent from its post-March peak of October 19, however.
Reuters
