Stocks surge on economic data

Wall Street rallied for a second straight session Wednesday after the government’s latest gross domestic product reading showed the economy was in better shape than expected, easing concerns that growth was moderating too sharply. The Dow Jones industrials rose 90 points.

Investors were upbeat after a series of reports, including GDP, pointed to the likelihood of an economic soft landing after more than two years of interest rate hikes that ended in June.

Major stock indexes held on to gains throughout the session even as oil prices moved to their highest levels in two months, topping $62 a barrel.

The Commerce Department said GDP expanded at a 2.2% real annual rate in the third quarter, topping its previous estimate of 1.6% and economists’ projections for a 1.8% gain.

Meanwhile, the Federal Reserve said in its “beige book� report that most areas of the U.S. had moderate economic growth in the first few weeks of November as consumer spending grew.

The market sank Monday, when the Dow lost 158 points in a bout of profit taking triggered in part by a sliding dollar. Analysts said Wall Street might be in a consolidation phase after its big rally of the last four months.

But stocks stabilized Tuesday and rebounded broadly Wednesday, when winners topped losers by more than 3 to 1 on the New York Stock Exchange.

“The most recent data confirm the basic picture we’ve seen for some months -- that it looks like we’re heading toward a soft landing, inflationary pressure is easing and that the housing market hasn’t collapsed as some feared,� said Ed Keon, chief investment strategist with Prudential Equity Group. “Soft landings, when we’ve had them, are great for stocks.�

The Dow rose 90.28 points, or 0.7%, to 12,226.73.

Among broader indexes, the Standard & Poor’s 500 was up 12.76 points, or 0.9%, at 1,399.48, and the Nasdaq composite gained 19.62 points, or 0.8%, to 2,432.23.

Another beneficiary of renewed optimism about the economy was the dollar, which rose against the euro for the first time in seven trading sessions.

The euro fell to $1.315 from a 20-month high of $1.319 on Tuesday.

In the Treasury bond market yields edged up. The 10-year Treasury note yield rose to 4.52% from 4.50% on Tuesday. Signs of economic strength may keep pressure on policymakers to continue lifting interest rates. The Treasury sold $14 billion of five-year notes at a yield of 4.51%.

The economic news came one day after Fed Chairman Ben S. Bernanke said U.S. growth would pick up next year. Fed policymakers, who meet Dec. 12, would not hesitate to raise interest rates further if inflation remained a risk, the central bank’s chief said.

“The comments by Bernanke were really to help keep the dollar up there,� said Alexander Paris, president of Chicago-based Barrington Research.

Leading stocks higher were energy issues, which rose after weekly supply data showed U.S. crude inventories fell more than expected. That pushed near-term oil futures up $1.47 to $62.46 a barrel in New York trading.

Among the day’s market highlights:

* Exxon Mobil rose $1.87, or 2.5%, to a record $76.03. Chevron gained $1.17 to $71.05, also a record high. Valero Energy rallied $1.77 to $54.88.

* Some transportation stocks fell on the potential for higher fuel costs. Trucking company Ryder Systems lost $1.16 to $52.73. Overseas Shipholding dropped $1.33 to $57.62.

* Metals producer Allegheny Technologies rallied $5.64 to $88.36 after saying margins for titanium and nickel alloys might approach 40% in the next two or three years. Titanium Metals surged $2.17 to $30.42 and RTI International Metals advanced $3.56 to $75.16.

Also in the sector, some steelmakers rose on continued takeover speculation. U.S. Steel climbed $2.57 to $73.99. Nucor was up $2.29 to $60.01.

* Fluor, the largest publicly traded U.S. engineering and construction company, gained $2.94 to $85.32. The company won a $2.2-billion contract to help build a petrochemical plant in Saudi Arabia.

* New York Times surged $1.73 to $24.76 on a report that billionaire Maurice Greenberg was buying the stock. But after regular trading ended a Greenberg spokesman said the investor owned fewer than 100,000 shares and had “no present intention of significantly increasing� his stake. The stock fell to $23.70 in after-hours activity.

* Apple Computer slipped 1 cent to $91.80 after reaching a record closing high Tuesday following news of strong weekend sales of computers and iPods.

* Pfizer, the world’s largest drug maker, fell 2 cents to $27.07 after it announced plans to cut 20% of its U.S. sales force, or about 2,200 jobs. The move is part of a cost-cutting program to transform the company into a more nimble organization.

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Bloomberg News and Reuters were used in compiling this report.