Stocks rise, day 2

NEW YORK (CNNMoney.com) -- Stocks surged Wednesday, rising for a second straight session, as investors welcomed a surprisingly strong read on GDP growth, which helped soothe worries about the speed of the economic slowdown.

The Dow Jones industrial average (up 90.28 to 12,226.73, Charts) jumped about 90 points, or 0.7 percent.

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The broader S&P 500 (up 12.76 to 1,399.48, Charts) index climbed 0.9 percent. The Nasdaq composite (up 19.62 to 2,432.23, Charts) added 0.8 percent.

The Russell 2000 (up 9.34 to 784.16, Charts), the small-cap benchmark, rose 1.2 percent.

After the close of trade, TiVo (up $0.01 to $6.29, Charts) reported a narrower-than-expected third-quarter loss, but issued a current-quarter revenue outlook that is short of forecasts, sending shares lower in extended-hours trading.

Hot Topic reported a smaller-than-expected drop in November sales at stores open a year or more, also known as same-store sales. The teen clothing retailer also issued a fourth-quarter earnings outlook that tops analysts' forecasts.

Thursday will bring November same-store sales figures from a variety of retailers, giving investors a better sense of how consumer spending is holding up at the start of the critical holiday shopping period.

Thursday also brings the October personal income and spending reports, including the report's inflation component, the core PCE deflator. There's also the weekly jobless claims report and the Chicago PMI - a regional read on manufacturing.

All three major gauges rallied Wednesday morning following the release of the stronger-than-expected gross domestic product growth report and a mixed read on housing.

Stocks lost a little steam in the afternoon as oil prices surged and as investors eyed the Federal Reserve's "beige book" survey of its 12 districts, which showed continued moderate growth in most parts of the country and a pickup in consumer spending outside the housing and auto sectors.

But by the close, the market was back near its highs of the session, rising for a second day after Monday's steep selloff.

Wall Street's herky-jerky motion both this week overall and in Wednesday's session "characterizes a market that's getting mixed signals about the economy and is reacting to those signals," said John Davidson, president and CEO at PartnerRe Asset Management.

The strong GDP report Wednesday both quelled worries about the speed of the economic slowdown, he said, but also reminded investors that the Fed is unlikely to start cutting interest rates anytime soon, something Wall Streeters have been hoping for.

The two-day advance after Monday's big selloff speaks to the optimistic undertone still in place right now, said Ken Tower, chief market strategist at CyberTrader.

Tower said that following Monday's big decline - Wall Street's worst day in four months - stocks could have been vulnerable to a lot more selling. "I thought the bears might have been able to string at least two days together, after essentially disappearing for four months."

But that proved not to be the case, he noted, and the tone looks like it should remain positive for the time being.

GDP grew at a faster-than-expected 2.2 percent annual rate in the third quarter, the government said Wednesday morning, versus an initial read of 1.6 percent. Economists surveyed by Briefing.com thought GDP growth would be revised up to a 1.8 percent rate.

The report helped quell some recent concerns about how much the economy would slow, particularly amid the slump in the housing sector.

A separate report showed that the pace of new home sales slowed at a faster-than-expected rate in October. But the median price of a new home in the period jumped. (Full story).

In corporate news, Ford Motor said that more than half of the automaker's U.S. factory work force has accepted offers to retire or resign, beating company targets. The greater-than-expected response to the buyout offer is seen as allowing the company to speed up its plant-closings and other cost-cutting efforts.

Ford (up $0.02 to $8.17, Charts) shares were little changed.

Pfizer (up $0.02 to $27.07, Charts), a Dow component, said late Tuesday that it was cutting its U.S. sales force by 20 percent as a means of reducing costs.

Separately, in the afternoon, a Food and Drug Administration advisory panel said that Pfizer's pain reliever Celebrex should be approved for treating rheumatoid arthritis in children, although the panel also questioned its safety. (Full story).

Fellow Dow stock Verizon Communications (up $0.49 to $34.89, Charts) gained on an A.G. Edwards upgrade, Briefing.com reported.

A variety of Dow stocks rose, with 26 out of 30 components advancing. Standouts included Intel (up $0.26 to $21.24, Charts), Merck (up $0.89 to $44.56, Charts), AT&T (up $0.68 to $33.50, Charts), Alcoa (up $0.79 to $30.99, Charts) and Home Depot (up $0.55 to $37.62, Charts).

A run up in oil prices gave a lift to oil stocks such as Exxon Mobil (up $1.87 to $76.03, Charts), Chevron (up $1.17 to $71.05, Charts) and Valero Energy (up $1.77 to $54.88, Charts).

The Amex Oil (up 29.60 to 1,208.39, Charts) index gained 2.5 percent.

Tiffany & Co. (up $2.29 to $38.22, Charts) gained after reporting higher quarterly earnings that beat estimates and issuing bullish earnings-per-share guidance for fiscal 2007.

Among other movers, shares of Dynavax Technologies (up $2.39 to $9.79, Charts) rallied 32 percent after the biotech reported positive results in a late-stage trial of its treatment for hepatitis B.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by four to one on volume of 1.60 billion shares. On the Nasdaq, advancers topped decliners two to one on volume of 1.94 billion shares.

U.S. light crude oil for January delivery jumped $1.47 to settle at $62.46 a barrel on the New York Mercantile Exchange. Oil jumped after the weekly oil inventories report showed a surprise dip in crude, gas and distillate supplies.

Treasury bond prices fell, raising the yield on the 10-year note to 4.52 percent from 4.50 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar bounced back versus the euro and the yen after the GDP report.

COMEX gold fell $1.90 to settle at $641.80 an ounce.

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