Stocks jump in early trade

Wall Street bounces following smaller-than-expected drop in GDP, record profit from oil giant Exxon.

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By CNNMoney.com staff

NEW YORK(CNNMoney.com) -- Stocks jumped Thursday morning as investors welcomed Exxon Mobil's record earnings and a report showed the U.S. economy shrank at a slower rate than expected.

The Dow Jones Industrial average (INDU) gained about 220 points, or 2.5%. The Standard & Poor's 500 (SPX) index rose 2.8% and the Nasdaq composite (COMP) lost 2.5%.

Economy: A preliminary reading on third-quarter gross domestic product revealed the U.S. economy shrank 0.3% on an annual basis, compared with a 2.8% increase in the previous quarter.

Economists were anticipating a decline of 0.5%, according to consensus estimates by Briefing.com. GDP rose at a 2.8% rate in the second quarter.

Jobless claims were unchanged but still remained elevated amid weakness in the economy, based on the latest weekly reading by the Labor Department.

New claims stood at a seasonally adjusted level of 479,000, ahead of estimates of 473,000.

The dismal economic news comes just a day after the Federal Reserve slashed interest rates by a half-percentage point to 1% Wednesday. Central banks in Hong Kong and Taiwan also cut rates Thursday, helping spark a rally in Asia.

Meanwhile, expectations are growing for the Bank of Japan to cut rates when it meets Friday. The European Central Bank and Bank of England, which both meet next week, also are expected to slash rates.

Companies: Oil giant Exxon Mobil (XOM, Fortune 500) reported quarterly profit of $14.83 billion - the largest ever for a U.S. company.

Helping drive its latest results were higher oil prices, which soared over the summer before sharply selling off in recent weeks. Rival Royal Dutch Shell (RDS.A) also posted a 22% rise in third-quarter profit Thursday.

Other areas across the corporate sector were not as bright however. Cell phone make Motorola (MOT, Fortune 500) booked a $397 million loss, which missed analysts' estimates, due in large part to sluggish cell phone sales.

World markets: Overseas markets rallied. Asian shares surged, with South Korea's KOSPI index gaining a record 12%. European markets were higher in midday trading.

Dollars and oil: The dollar slipped versus the euro and the British pound, but was higher versus the yen. Oil prices slipped 46 cents to $67.04 a barrel on the New York Mercantile Exchange. To top of page

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