Cheaper oil, GDP cheer investors
NEW YORK – Stocks rose for the third straight session Thursday as oil prices fell sharply and the government reported that the economy grew last quarter at a faster pace than previously estimated.
A rising dollar helped push crude oil prices down by more than $4 a barrel, the biggest single-session drop since March.
Investors have been concerned recently that rising oil and gasoline prices would dent consumer spending, which accounts for more than two-thirds of U.S. economic activity.
The revised reading of first-quarter gross domestic product helped ease some worries over recession, which is defined by two straight quarters of decreasing GDP. The Commerce Department said the economy grew at an annual rate of 0.9 percent – above the department’s earlier estimate of 0.6 percent and the fourth-quarter increase of 0.6 percent.
Meanwhile, MasterCard Inc. said consumers are continuing to reach into their wallets for plastic. The company’s shares jumped to a fresh high after the credit card processor said it still expects to see double-digit growth in net revenue this year. While it said gross dollar growth in the U.S. is slowing, purchasing is increasing in other parts of the world. Avoiding a big falloff in consumer spending and strength elsewhere in the world could help the U.S. economy avoid a serious downturn, some economists have reasoned.
The signs Thursday of resilience in the U.S. economy were welcome.
“The GDP news was pretty good. From our perspective, we’re not going to see a negative quarter of GDP, so earnings are going to improve,” said Scott Wren, senior equity strategist for Wachovia Securities.
The Dow Jones industrial average rose 52.19, or 0.41 percent, to 12,646.22. The Dow was up nearly 133 points at its high of the session.
Broader stock indicators also rose after mixed trading early in the session. The Standard & Poor’s 500 index advanced 7.42, or 0.53 percent, to 1,398.26, and the Nasdaq composite index rose 21.62, or 0.87 percent, to 2,508.32.
Overseas, Japan’s Nikkei stock average closed up 3.03 percent. Britain’s FTSE 100 slipped 0.02 percent, Germany’s DAX index advanced 0.30 percent, and France’s CAC-40 rose 0.10 percent.