A better-than-expected GDP reading in the US sent stocks substantially higher for the third straight session on Friday, with the Dow Jones industrial average and Standard & Poor's 500 index each posting its best close of the year. The major indexes all finished a turbulent week higher.
Wall Street welcomed the latest GDP data, which showed the economy growing at an annualized rate of 3.8 percent in the fourth quarter, up from last month's 3.1 percent estimate from the Commerce Department and better than economists' 3.5 percent forecast.
As stocks rose through the session, investors managed to put aside recent fears of inflation and focus on the growing economy, which should allow the Federal Reserve to continue its policy of regular interest rate hikes without harming companies' ability to borrow money.
"The lingering fear in the market right now is the Federal Reserve, because they are in a process of moving rates higher, but nobody knows really how far," said Joseph Keating, chief investment officer at AmSouth Asset Management.
"But if you look at today's data, for example, you see that the economy is in good shape, fundamentals are sound. What's not to like about the stock market? We just have to get past these fears," he said.
According to preliminary calculations, the Dow Jones industrial average rose 92.81, or 0.9 percent, to 10,841.60.
It was the Dow's best close since Dec. 28, and gave the blue chips a 230.40-point gain, following Thursday's advance of 75.00 and Wednesday's 62.59.
Broader stock indicators were moderately higher. The Standard & Poor's 500 index was up 11.17, or 0.9 percent, at 1,211.37, its best showing since Dec. 31. The technology-focused NASDAQ composite index gained 13.70, or 0.7 percent, to 2,065.40. The NASDAQ continues to lag behind the other major indexes and remains down for the year.
Weakness in the dollar and a sharp rise in oil prices above US$50 per barrel made for a volatile week on Wall Street, marked by a 174-point tumble in the Dow on Tuesday. Strong economic data helped push the indexes higher toward week's end, however. All three indexes finished the week higher.
Advancing issues outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies was up 9.97, or 1.6 percent, at 637.53.
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