The Closing Bell, 10/29: A big boost from GDP growth

Stocks logged their best day in three months as investors rushed into the market on word the economy grew faster than expected during the summer.

The Dow Jones industrial average jumped 200 points and recouped most of its losses for the week, while demand for safe-haven holdings like Treasurys wilted.

Most big Kansas City area companies joined in the rally. Cerner was up $1.13, to $77.99, a day after reporting earnings. UMB Financial was up 99 cents, to $41.29, and Waddell & Reed was up 82 cents, to $29.58.

A decline continued, however, for Garmin, which was battered Wednesday on news that Google would offer GPS service at no extra charge with the new version of its Android cellphone operating software. Garmin fell an additional 74 cents on Thursday, to $30.85. Sprint also was down 15 cents, to $3.09, after reporting another quarterly loss Thursday, and Kansas City Southern, which also reported earnings, slipped just a penny, to $24.58.

The Commerce Department's report that gross domestic product rose at an annual rate of 3.5 percent in the third quarter reinvigorated investors who had dumped stocks for much of the week on signs of a slowing housing market and a disappointing report on consumer confidence.

The economic growth came in ahead of the 3.3 percent rise forecast by economists polled by Thomson Reuters. It was the strongest growth in two years and broke four straight quarters of declines. Coming on the 80th anniversary of the stock market crash that triggered the Great Depression, it was the best indication yet that the longest recession since then has ended.

But many analysts caution that it will be hard to sustain the growth at the pace seen in the third quarter.

Government stimulus programs including the popular Cash for Clunkers auto rebates and tax credits for first-time home buyers bolstered the economy. Once the government's stimulus measures run their course, the economy could run afoul of lingering problems such as high unemployment and weak consumer spending.

“I don't think that at this point in the rebound that the economy would be self-sustainable,” said Jason D. Pride, director of research at Haverford Investments in Philadelphia. “The only way to have effective sustained economic growth is to have job growth, but it tends to come later.”

The Dow Jones industrial average rose 199.89, or 2.1 percent, to 9,962.58. It was the best day for the Dow since July 15.

The broader Standard & Poor's 500 index rose 23.48, or 2.3 percent, to 1,066.11, while the Nasdaq composite index rose 37.94, or 1.8 percent, to 2,097.55.

Bond prices fell, pushing their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.50 percent from 3.42 percent late Wednesday. Bonds extended their early losses after a lackluster auction of seven-year notes.

The ICE Futures US dollar index, which measures the dollar against other major currencies, fell after five straight days of gains. The weaker dollar made commodities more attractive for foreign buyers. Gold rose $16.60 to $1,047.10 an ounce on the New York Mercantile Exchange, while crude oil soared $2.41 to settle at $79.87 a barrel.

In earnings news, Motorola Inc. shares climbed nearly 10 percent after the cell phone maker posted its second straight quarterly profit following months of heavy losses. The stock rose 78 cents to $8.74.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.7 billion Wednesday.

The Russell 2000 index of smaller companies rose 13.86, or 2.5 percent, to 580.22.

Overseas, Britain's FTSE 100 rose 1.1 percent, Germany's DAX index rose 1.4 percent and France's CAC-40 gained 1.3 percent. Japan's Nikkei stock average fell 1.8 percent.

The KansasCity.com index of 145 regional companies showed a gain of 14.57 points, or 2.46 percent, at 606.23.

Among Kansas City area companies of interest:

I Cerner Corp. closed at $77.99, up $1.13.

I Capitol Federal Financial closed at $30.86, up 26 cents.

I Commerce Bancshares Inc. closed at $39.07, up 21 cents.

I DST Systems Inc. closed at $42.70, up 40 cents.

I Garmin Ltd. closed at $30.85, down 74 cents.

I Great Plains Energy closed at $17.65, up 8 cents.

I H&R Block Inc. closed at $18.96, up 37 cents.

I Kansas City Southern closed at $24.58, down 1 cent.

I Sprint Nextel Corp. closed at $3.09, down 15 cents.

I UMB Financial Corp. closed at $41.29, up 99 cents.

I Waddell & Reed Financial Corp. closed at $29.58, up 82 cents.

I YRC Worldwide Inc. closed at $4.06, up 42 cents.

The Closing Bell is compiled from staff and wire reports.