Stock futures point to higher opening after better-than-expected GDP report

Stock futures higher after GDP report

NEW YORK — Stock futures rose sharply, pointing to a higher opening Thursday, after the government said the economy grew at a stronger than expected pace during the third quarter.

Investors have spent the past couple of months hunting for clues of just how much the economy has recovered. Thursday’s gross domestic product reading gave them the surest sign yet that the economy is on the upswing.

The GDP report eased worries over the past week that the economy might be too weak to justify the market’s nearly eight-month rally.

The Commerce Department said the economy grew at an annual pace of 3.5 percent in the third quarter, faster than the 3.3 percent increase predicted by economists polled by Thomson Reuters.

The growth was the best in two years and stops four consecutive quarters of declines that had pushed the economy into its worst recession since the Great Depression.

Growth was bolstered by government stimulus programs, including the popular cash-for-clunkers auto program and tax credits for first-time home buyers.

Ahead of the opening bell, Dow Jones industrial average futures rose 80, or 0.87 percent, to 9,791. Standard & Poor’s 500 index futures gained 9.60, or 0.9 percent, to 1,048.20, while Nasdaq 100 index futures rose 18.00, or 1.1 percent, to 1,698.50.

Mitch Schlesinger, a managing partner at FBB Capital Partners in Bethesda, Md., said that because of government support, fourth-quarter GDP should provide a better picture of how much the economy has recovered.

“Some of the artificial goosing of the numbers will come out and we’ll get a better picture,” Schlesinger said. He added that the economy is likely to grow in the fourth quarter, but probably not at as fast a pace as the third quarter.

In the interim, however, investors will welcome the better-than-expected third quarter report, he said.

Investors were also pleased by the Labor Department’s report that people receiving unemployment benefits on an ongoing basis dropped sharply by 148,000 to 5.8 million, below economists’ expectations.

Workers filing first-time claims for unemployment dipped 1,000 to a seasonally-adjusted 530,000 last week. Economists expected a larger decline to 521,000.

Stocks are trying to rebound after being pummeled for the third straight day on Wednesday. A disappointing report on sales of new homes helped ignite worries about the pace of a recovery.

Meanwhile, bond prices fell Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.47 percent from 3.42 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.06 percent.

The dollar mostly fell against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average fell 1.8 percent. In afternoon trading, Britain’s FTSE 100 rose 0.7 percent, Germany’s DAX index gained 1.2 percent, and France’s CAC-40 jumped 1.2 percent.