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U.S. stocks rally after upbeat GDP report

Xinhua, October 28, 2016 Adjust font size:

U.S. stocks ticked up in the morning session Friday as the country's third-quarter economic growth came out stronger than expected.

Around midday, the Dow Jones Industrial Average added 55.81 points, or 0.31 percent, to 18,225.49. The S&P 500 rose 4.41 points, or 0.21 percent, to 2,137.245 The Nasdaq Composite Index inched up 4.61 points, or 0.09 percent, to 5,220.58.

U.S. real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the third quarter of 2016, beating market consensus of 2.5 percent, according to the "advance" estimate released by the Commerce Department Friday. In the second quarter, real GDP increased 1.4 percent.

The acceleration in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in the state and local government spending, and an upturn in the federal government spending, the department said.

"When the FOMC meets next week, this report will be fresh in their minds. They are likely to see it as vindication of their forecast and further reason to raise rates, despite the eroding trend still evident in the year-on-year figures," said Chris Low, chief economist at FTN Financial, in a note.

In corporate news, after Thursday's closing bell, Amazon.com, Inc. announced a net income of 252 million U.S. dollars for the third quarter of 2016, or 0.52 dollar per diluted share, compared with 79 million dollars, or 0.17 dollar per diluted share, in third quarter of 2015.

Following the release of the weaker-than-expected quarterly results, the e-commerce giant's shares slumped over 4 percent around midday Friday.

On Thursday, U.S. stocks reversed early gains to end lower as investors pondered over a batch of quarterly earnings results amid negative economic data. Endit