Wall Street showed some welcome signs of stability Thursday, taking a downbeat gross domestic product report in stride and driving the Dow Jones industrial average up nearly 190 points in relatively calm trading. Even the last hour of the session, lately a period of turbulent activity, was comparatively quiet.
The market that a week ago was reeling from fears about recession was more composed after the Commerce Department's report that GDP fell at an annual rate of 0.3 percent during the third quarter. Analysts expected a 0.5 percent decline in GDP, the broadest measure of economic growth or contraction, but while the report was better than expected, it still pointed to an economy that is shrinking.
It's premature to say the market's volatility is over — most analysts expect trading to remain erratic for many months, and some believe investors will eventually test the lows that were reached on Oct. 10, when the Dow traded as low as 7,882.51. But Thursday's trading session was the most placid in weeks, a sign that the market might be in the process of bottoming, analysts say. The Dow was only briefly in negative territory, and traded in a range of less than 300 points — well below the 400- and 500-point swings that have become commonplace.
"It does look like the market is taking a tentatively better tone today," said Alan Gayle, senior investment strategist, director of asset allocation for RidgeWorth Capital Management. "Pessimism and skepticism have become the dominant mode of thinking. And that's usually when I think that the market is more ripe for a rebound."
The market did not erupt into frantic buying or selling in the last half-hour of trading — a move that has become almost expected at the end of every session as big funds tried to raise cash to meet investors' calls for their money back, or rushed to cover their short positions. The last hour saw the Dow move in a range of 206 points, compared with a 370-point swing in the last quarter-hour of Wednesday's session.
"There's the idea that life goes on, and will go on," said Richard E. Cripps, chief market strategist for Stifel Nicolaus, noting that the daily trading range Thursday for the Standard & Poor's 500 index was about half its October average. "The market sort of inhaled, and it was waiting to exhale — and you're seeing that now."
The Dow rose 189.73, or 2.11 percent, to 9,180.69.
Broader stock indicators also finished higher. The S&P 500 index rose 24.00, or 2.58 percent, to 954.09, while the Nasdaq composite index rose 41.31, or 2.49 percent, to 1,698.52.
The Russell 2000 index of smaller companies rose 23.30, or 4.75 percent, to 514.18.
Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where volume came to a light 1.38 billion shares.
The Dow is still down 15 percent for the month of October, following the mid-September bankruptcy of Lehman Brothers Holdings Inc. that contributed to a freeze in the credit markets, and in turn, devastating losses on Wall Street.
Still, the credit markets showed signs that investors are still quite cautious, with short-term government debt still in demand. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, fell to 0.37 percent from 0.55 percent Wednesday. A drop in yield indicates an increase in buying. Meanwhile, the yield on the benchmark 10-year Treasury note rose to 3.97 percent from 3.86 percent late Wednesday.
On Thursday, the dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.54 to settle at $65.96 per barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average jumped 9.96 percent. Britain's FTSE 100 rose 1.16 percent, Germany's DAX index rose 1.26 percent, and France's CAC-40 rose 0.15 percent.