Wall Street recap: Stocks post strong rally on GDP report

Stocks post strong rally on positive GDP report

NEW YORK Stocks logged their best day in three months as investors rushed into the market on word the economy grew faster than expected during the summer.

The Dow Jones industrial average jumped 200 points yesterday to recoup most of its losses for the week, while demand for safe-haven holdings like Treasurys wilted.

The Commerce Department's report that gross domestic product rose at an annual rate of 3.5 percent in the third quarter reinvigorated investors who had dumped stocks for much of the week on signs of a slowing housing market and a disappointing report on consumer confidence.

The economic growth came in ahead of the 3.3 percent rise forecast by economists polled by Thomson Reuters. It was the strongest growth in two years and broke four straight quarters of declines. Coming on the 80th anniversary of the stock market crash that triggered the Great Depression, it was the best indication yet that the longest recession since then has ended.

But many analysts caution that it will be hard to sustain the growth at the pace seen in the third quarter. They say the recovery is likely to be bumpy as consumers try to pay down debt and credit for small businesses remains tight. But such concerns were pushed aside yesterday. The Dow rose 199.89, or 2.1 percent, to 9,962.58. It was the Dow's best day since July 15.

The number of people claiming jobless benefits for the first time, meanwhile, dropped less than expected last week.