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US: Stocks advance after stronger GDP data
[WASHINGTON] US stocks rose, following their biggest gains since 2011, amid a relief rally throughout global markets and as data showed the economy grew more than previously estimated.
The Standard & Poor's 500 Index rose 1.3 per cent to 1,965.08 at 10.03 am in New York, after halting on Wednesday its worst six-day plunge in four years. The Dow Jones Industrial Average climbed 168.16 points, or 1 per cent, to 16,453.67. The Nasdaq Composite Index gained 1.2 per cent, after earlier rising 1.9 per cent.
"The economy is in good shape and we're chugging along at a good pace and that's good for earnings," said John Canally, chief economic strategist at LPL Financial Corp. in Boston. "It also should clear some of the noise out of this market. There has been a lot of concern about a slowdown in the economy."
Data on Monday showed gross domestic product rose at a 3.7 per cent annualized rate, exceeding all estimates of economists surveyed by Bloomberg, and up from the 2.3 percent reported last month. Bigger gains in consumer and business spending showed the U.S. expansion getting back on track. A separate report showed filings for jobless benefits declined to a three-week low.
Other data also showed contracts to purchase previously owned homes climbed in July for the sixth time in the last seven months, signaling further momentum in residential real estate. The pending home sales index increased 0.5 per cent after a revised 1.7 per cent decline in June, the National Association of Realtors said today.
The GDP report comes as Federal Reserve policy makers debate whether growth is strong enough to withstand the first increase in the benchmark interest rate since 2006. Additionally, the global plunge in stocks also could argue for a delay.