Blue Chips Rally (10/15/2003)
The positive economic data was well received by Wall Street, a notable change from recent months when the buoyant economy made investors concerned over rising interest rates and the possibility of inflation. But it also calmed a market that only Wednesday was worried that the economy might be slowing too much.
Investors were also encouraged by a decline in weekly jobless claims and easing oil prices.
John Lynch, chief market analyst at Evergreen Investments, said interest rate jitters and inflation woes have largely worked their way through the markets, with investors finally focusing on positive fundamentals including strong consumption and business spending.
“The perception of bad stuff has been priced in,” Lynch said. “Interest rates, oil prices, yes, they could serve to limit growth. But I think investors are really thinking that this is all priced in. It’s a day of clarity.”
The Dow Jones industrial average was up 95.31 points, or 0.9 percent, at 10,205.20 by the close. The Dow last closed above that level on May 6, and has risen 246.77 points, or 2.5 percent, since Monday’s close.
Broader stock indices were moderately higher. The Standard & Poor’s 500-stock index was up 6.34 points, or 0.6 percent, at 1,121.28 and the Nasdaq composite index gained 8.35 points, or 0.4 percent, to close at 1,984.50. It was the best close for the S&P 500 index since April 29, and the best close for the Nasdaq composite since April 28.
Before the market opened, the Commerce Department reported that the economy grew at a 4.4 percent annual rate in the first quarter of this year. The solid growth rate was slightly faster than the 4.2 percent pace first estimated a month ago as well as the 4.1 percent growth rate registered in the final quarter of 2003.
Separately, the Labor Department said new applications for unemployment benefits dropped last week by a seasonally adjusted 3,000 to 344,000. Oil prices also eased, slipping below the $40 per barrel mark, easing another source of recent worry for investors.