US stocks logged their best one-day percentage gain in three months on Thursday as investors saw data showing the US economy returned to growth in the third quarter as brightening the outlook for profits. The government's first estimate of US gross domestic product showed the economy expanded at an annual rate of 3.5 percent in the third quarter, suggesting it was emerging from the worst recession in 70 years.
The quarter of growth was the first after more than a year of contraction in GDP. Equity gains were widespread, with big manufacturers, technology, financials, energy and the materials sectors all benefiting. The S&P 500 and the Nasdaq halted a four-day rout.
The Dow Jones industrial average gained 199.89 points, or 2.05 percent, to end at 9,962.58. The Standard & Poor's 500 Index jumped 23.48 points, or 2.25 percent, to 1,066.11 - marking its biggest one-day percentage gain in three months. The Nasdaq Composite Index shot up 37.94 points, or 1.84 percent, to close at 2,097.55.
Weakness in the US dollar also underpinned Thursday's stock action as the appetite for riskier assets resurfaced. The CBOE Volatility Index, Wall Street's most closely watched gauge of investor fear, slid 11.3 percent, its biggest one-day percentage drop in eight months.
Economists in a Reuters poll last week expected GDP to gain 3.3 percent, although some recent data led many to trim forecasts this week. Shares of Dow component P&G, which also raised its full-year revenue outlook, gained 4 percent to $59.54, while Colgate-Palmolive shares rose 1.6 percent to $78.94. The S&P consumer staples index gained 1.8 percent. Caterpillar Inc, whose products include bulldozers and excavators, rose 5.2 percent to $57.25, as shares of aircraft maker Boeing Co rose 3.4 percent to $48.81. iPhone maker Apple Inc rose 2.1 percent to $196.35 on Nasdaq, where Symantec Corp jumped 12.8 percent to $17.74, a day after the business software maker posted a quarterly profit that eclipsed Wall Street's forecasts.
Several brokerages raised price targets on Symantec. Higher oil prices contributed to the energy sector's gains, with the S&P energy index up 2.4 percent. Chevron Corp gained 2.7 percent to $77.95 ahead of its quarterly results on Friday. Exxon Mobil Corp edged up 0.2 percent to $73.96, but the stock spent most of the session in negative territory following the company's report of a third-quarter profit below expectations. Even with the optimism inspired by the latest GDP report, other money managers said there was still reason to be cautious as the recovery might prove bumpy.
Data from the Labour Department showed that the number of US workers filing new claims for jobless benefits fell last week, though not by as much as expected. The S&P 500 is up 57.6 percent from its 12-year closing low of March 9. With just one trading day left in the month, the S&P 500 is up 0.9 percent. But the benchmark S&P is off 2.9 percent from its post-March peak reached on October 19.
Volume was moderate on the New York Stock Exchange, with about 1.46 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.34 billion shares traded, above last year's daily average of 2.28 billion. Advancers beat decliners by a ratio of nearly 5 to 1 on the NYSE, while on the Nasdaq, more than two stocks rose for every one that fell.