Strong Day, Big Finish
08/28/08 - 04:19 PM EDT
Mike Taylor
Updated from 3:12 p.m. EDT
After holding strong all day, stocks in New York closed with big gains Thursday following the release of better-than-anticipated GDP data that stoked investor confidence in the economy. A decline in the price of crude oil and a drop in unemployment numbers also provided a boost to the markets. The Dow Jones Industrial Average surged 212.67 points, or 1.9%, to 11,715.18, and the S&P 500 climbed 11.46 points, or 0.9%, to 1293.12. The Nasdaq rose on 29.18 points, or 1.2%, to 2411.64. On the economic-data front, the Bureau of Economic Analysis' second-quarter GDP number was revised upward, assuaging fears that the economy is veering toward reflection. The updated number reflected growth of 3.3% rather than an initial reading of 1.9%. The new figure was well ahead of analysts' forecast of 2.7%. Jobless claims for the week ended Aug. 23 came in at 425,000, in line with expectations and down from 435,000 in the previous week. The improvement in the GDP number owes an improving trade balance and increased consumer spending, Peter Morici, professor of international business at the University of Maryland, wrote in an email. A weak dollar helped prop up exports, but "with growth slowing in Europe, Japan, China, and elsewhere and the dollar recovering a bit, it is questionable whether export strength will continue," he wrote. The bump in consumer spending was largely assisted by the economic stimulus package, wrote Morici. The effects of that government initiative are not probably done now and consumption should slow from here, he wrote. He predicted a bottom in the U.S. economy during the fourth quarter of 2008 and the first quarter of 2009, thanks in part to continued growth in productivity.
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