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Economic surge stems market's plunge

BY MEG RICHARDS
Associated Press


NEW YORK
- A solid reading on the economy gave investors some badly needed reassurance Thursday, propelling the Dow Jones industrials up 170 points and the Nasdaq composite index up 3 percent. But analysts were divided over whether the rally signaled an end to Wall Street's correction or was simply fueled by bargain-hunting.

The market has been in a corrective phase for about nine weeks, weighed down by a number of factors, from concerns over high stock valuations to fears about global terrorism. While it was not clear whether the advance would be sustained, the worst is probably over, said Alfred Goldman, chief market strategist with A.G. Edwards Inc. in St. Louis.

"We think the correction has probably done its dastardly deed and the primary trend remains up," Goldman said. "The outlook for the economy remains positive, the forecasts for corporate earnings are up.... I would advise people who are on the sidelines to do some selective buying."

The Dow rose 170.59, or 1.7 percent, to 10,218.82, after declining more than 250 points over the last five sessions.

The broader gauges were also markedly higher. The Nasdaq soared 57.69 to 1,967.17. The Standard & Poor's 500 index gained 17.86 to 1,109.19. I

Investors got some solace before the market opened when the Commerce Department confirmed estimates that the economy grew at a solid 4.1 percent annual rate during the last quarter of 2003. The gross domestic product is considered the most important barometer of the economy's health.

Wall Street forecasts call for 4.5 percent GDP growth through the first half of this year, as tax incentives motivate consumer and business spending. But that level of growth may not be sustainable if the labor market doesn't improve dramatically.

 

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