US stocks gain despite contracting quarter

Business Materials 31 October 2008 02:12 (UTC +04:00)

Wall Street stock indices climbed Thursday despite new government data showing the US economy shrank in the third quarter of 2008, dpa reported.

The 0.3-per-cent contraction in gross domestic product - the largest quarterly decline since the 2001 recession - was less than the 0.5-per-cent drop forecast by economists.

Consumer spending shrunk by 3.1 per cent in the quarter, the largest drop since 1980, as a financial crisis has severely curbed lending in the United States.

The stock rally followed strong gains on Asian and European markets, which were buoyed by the Federal Reserve's 0.5-per-cent rate cut Wednesday and by plans to pump as much as 120 billion dollars in liquidity into four key emerging markets.

The blue-chip Dow Jones Industrial Average rose 189.73 points, or 2.11 per cent, to 9,180.69. The broader Standard & Poor's 500 was up 24 points, or 2.58 per cent, to 954.09. The technology-heavy Nasdaq Composite Index, climbed 41.31 points, or 2.49 per cent, to 1,698.52.

On currency markets, the dollar climbed to 98.58 yen from 97.06 yen on Wednesday. The US currency held steady against the euro at 77.21 euro cents.