US stocks rallied on Friday, giving the Dow average its biggest one-day point rise since April, as a government report showed third-quarter economic growth that exceeded expectations and Microsoft Corp's earnings lifted the technology sector.
The 3.8 percent annual rate in gross domestic product in the third quarter, reported by the Commerce Department, relieved some concern about the impact of Hurricanes Katrina and Rita, as well as rising energy prices, on the US economy.
Shares of Microsoft shot up 2.7 percent to $25.53 on Nasdaq and pulled other technology stocks higher as investors were heartened by its results, despite a disappointing revenue forecast. Late Thursday, the world's largest software company reported a 24 percent increase in fiscal first-quarter profit, slightly beating estimates.
"The GDP report looked pretty good, showing greater-than- expected strength, with inflation statistics not bad," said Jon Brorson, managing director of growth equities at Neuberger Berman.
The blue chip Dow Jones industrial average jumped 172.82 points, or 1.69 percent, to end at 10,402.77. The broad Standard & Poor's 500 Index climbed 19.51 points, or 1.65 percent, to finish at 1,198.41. The technology-laced Nasdaq Composite Index advanced 26.07 points, or 1.26 percent, to close at 2,089.88.
The Libby indictment was returned by a grand jury investigating the leak of a covert CIA operative's identity. Traders said the market was somewhat relieved that President George W. Bush's top adviser Karl Rove was not also indicted in the case. Rove, however, is still under investigation.
"Even at the open, we knew it was just going to be Libby, and if nothing else, at least the uncertainty is gone," said Jim Paulsen, chief investment officer at Wells Capital Management.
For the week, the Dow rose 1.84 percent, while the Nasdaq gained 0.37 percent, and the S&P 500 advanced 1.60 percent.
The day's pop ended a volatile week of trading that began with a rally on Monday when Bush nominated White House economic adviser Ben Bernanke to succeed Alan Greenspan as Federal Reserve chairman.
The Fed's policy-making committee meets on Tuesday, when it is expected to boost interest rates again in its campaign to control inflation.
Bonds sold off as investors poured some of that money into stocks. The benchmark 10-year US Treasury note slipped 5/32 to 97-15/32 in price, while its yield rose to 4.58 percent from 4.56 percent on Thursday.
Mike Viracola, managing director at Adams Harkness, said end-of-month positioning by traders also lifted the market.
Avon's stock climbed 12.5 percent, or $3.08, to $27.79 on the New York Stock Exchange. It was among the Big Board's leading percentage gainers. Earlier, Avon hit a session high of $28.61, up nearly 16 percent from Thursday's NYSE close.
In the tech sector, Texas Instruments Inc shares rose 1.9 percent, or 53 cents, to $28 on the NYSE and Intel Corp added 2.2 percent, or 49 cents, to $23.33 on Nasdaq.
Blue-chip stocks like Altria Group and Boeing Co, as well as retailers Wal-Mart Stores Inc and Home Depot, gained after the GDP report. The GDP is the measure of all goods and services produced within US borders.
Altria, parent of cigarette maker Philip Morris USA, was up 2.3 percent, or $1.71, at $75.11, while Boeing, the big US aircraft maker and defence contractor, was up 2.5 percent, or $1.59, at $65.64.
Wal-Mart, the world's largest retailer, rose 1.7 percent, or 76 cents, to $45.50, while Home Depot, the biggest home improvement retailer, advanced 2.9 percent, or $1.13, to $40.52.
Trading was heavy, with 1.75 billion shares changing hands on the NYSE, well above the 1.46 billion daily average for last year. About 1.90 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
The number of advancers outnumbered decliners by about 3 to 1 on the NYSE. On Nasdaq, advancing stocks beat decliners by about 2 to 1.