US stocks rally on strong GDP growth

Stocks rallied sharply today, with the Dow Jones industrials gaining 172 points on better-than-expected gross domestic product growth last quarter despite the disruptions caused hurricanes Katrina and Rita. The major indexes finished an erratic week higher.

The upswing in economic activity for the July-September quarter soothed a market anxious for signs of the economy’s health amid fears of a downturn. The gross domestic product growth also overshadowed a drop in consumer confidence and a weak forecast from oil company Chevron Corp.

“It basically drove home the point that the economy was healthy before the hurricanes and indeed may have remained healthy afterward as well,” said Doug Porter, a senior economist at BMO Nesbitt Burns, who noted gains in spending and business investment among increases in nearly every GDP component in the Commerce Department’s report.

The Dow Jones industrial average jumped 172.82, or 1.69%, to 10,402.77, its biggest one-day gain since April 21.

Broader stock indicators were also higher. The Standard & Poor’s 500 index gained 19.51, or 1.65%, to 1,198.41, and the Nasdaq composite index climbed 26.07, or 1.26%, to 2,089.88.