Dow surges 172 points on GDP report

NEW YORK – Stocks rallied sharply Friday, with the Dow gaining 172 points on better-than-expected gross domestic product growth last quarter despite the disruptions caused by Hurricanes Katrina and Rita. The major indexes finished an erratic week higher.

The upswing in economic activity for the July-September quarter soothed a market anxious for signs of the economy’s health amid fears of a downturn. The GDP figure also overshadowed a drop in consumer confidence and a weak forecast from oil company Chevron Corp.

“It basically drove home the point that the economy was healthy before the hurricanes and indeed may have remained healthy afterward as well,” said Doug Porter, a senior economist at BMO Nesbitt Burns, who noted gains in spending and business investment among increases in nearly every GDP component in the Commerce Department’s report.

The Dow Jones industrial average jumped 172.82, or 1.69 percent, to 10,402.77, its biggest one-day gain since April 21.

Broader stock indicators were also higher. The Standard & Poor’s 500 index gained 19.51, or 1.65 percent, to 1,198.41, and the Nasdaq composite index climbed 26.07, or 1.26 percent, to 2,089.88.

Bonds declined as stocks rose, with the yield on the 10-year Treasury rising to 4.57 percent from 4.55 percent late Thursday. The dollar was higher against most major currencies, while gold prices inched upward.

Oil traded in a narrow range despite fears that recovering Gulf Coast facilities will struggle with heating oil demand as winter makes an early approach. A barrel of light crude rose 13 cents to settle at $61.22 on the New York Mercantile Exchange.

Wall Street closed out a week of volatile trading as investors juggled mixed corporate earnings reports and renewed interest-rate worries following the nomination of top White House economist Ben Bernanke as the next Federal Reserve chief.