News that the United States economy grew by more than previously thought in the second quarter of the year and an unexpectedly large drop in the number of weekly jobless claims drove stocks higher for much of the day.
But after a 2 percent gain at the start of trading, Wall Street lost steam in the afternoon. A half-hour before the close of trading, the Dow Jones industrial average was dead-even with Wednesday’s close — and then rallied again to close up 1.3 percent, or about 143 points, to 11,153.98.
The Standard Poor’s 500-stock index also eked out a gain in the last half-hour, rising 0.8 percent for the day, or 9.34, to 1,160.40. The Nasdaq composite index, weighed down by a 1.8 percent drop in Apple stock, fell 0.4 percent, or 10.82 points to 2,480.76.
The Commerce Department said the economy grew at an annual rate of 1.3 percent in the April-June quarter, up from an estimate of 1 percent made a month ago. The improvement reflected more consumer spending and more exports.
“The quality of the improvement far outweighs the scale of improvement with the U.S. consumer key to future growth,” said Michael Woolfolk, an analyst at the Bank of New York Mellon. “The risk for the third quarter is to the upside, with the outside possibility that it could well come in at the upper end of the 2.0 to 3.0 percent range.”
Further good news emerged from the Labor Department, which found that jobless claims last week dropped 37,000 to a seasonally adjusted 391,000, the lowest level since April 2. It is the first time applications have fallen below 400,000 since Aug. 6.
The mood in stock markets had been largely positive after a clear victory for Chancellor Angela Merkel in a vote on beefing up Europe’s bailout fund. More encouraging for the markets, perhaps, was the fact that Mrs. Merkel did not have to rely on support from opposition parties.
In the short term, the vote in favor of an expanded rescue fund indicated that Germany was fully behind efforts to shore up Europe’s defenses against a crisis that has already required three countries to be bailed out and stoked talk that Greece would default.
“The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control,” said Sony Kapoor, managing director of Re-Define, an economic research group.
In Europe, the DAX in Germany closed up 1.1 percent, as did the CAC 40 in France. The FTSE 100 index of leading British shares was off 0.4 percent.
The improved appetite for risk on Thursday also helped the euro brush off another survey showing that Europe’s economy was grinding to a halt. When risk appetite is high, the euro usually garners support against the dollar. Following the German vote, it was trading 0.8 percent higher at $1.3629.
Earlier in Asia, the Nikkei 225 index in Japan swung between gains and losses before finishing up 1 percent. The Kospi in South Korea index shot up 2.7 percent. The Shanghai Composite Index in China dropped 1.1 percent. Markets in Hong Kong were closed due to severe weather.
Oil prices tracked equities higher too. Benchmark crude for November delivery rose $1.88 to $83.09 a barrel on the New York Mercantile Exchange.
Article source: http://www.nytimes.com/2011/09/30/business/daily-stock-market-activity.html?partner=rss&emc=rss
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