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US close: Stocks surge on GDP data

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Date: Thursday 28 Aug 2008

LONDON (ShareCast) - Wall Street surged ahead after US gross domestic product grew faster than expected in the second quarter, while oil prices slipped lower.

US GDP grew by an annualised 3.3% in the second quarter after rising 0.9% in the first quarter, driven by buoyant exports and the benefits of the government’s tax stimulus package.

Falling oil prices gave stocks a further boost. A barrel of oil fell $2.56 to $115.59 as the dollar strengthened. Traders are waiting to see whether tropical storm Gustav will disturb the oil installations in the Gulf of Mexico.

Meanwhile, the Labor Department said job benefit claims dropped to 425,000, down 10,000 from last week.

Across the markets, the Dow Jones rose 212 points to 11,715 with the Nasdaq rising 29 points to 2411. The S&P 500 finished 19 points higher.

In company news, Sears saw net profit tumble 62% in the second quarter to $65m, giving earnings per share (EPS) of $0.50. Analysts had been bracing themselves for an EPS figure as low as $0.33.

Tiffany’s second quarter earnings per share figure also topped expectations, coming in at $0.63 versus a consensus forecast of $0.55.

Pots and pans retailer Williams-Sonoma fell after price reductions resulted in a sharp fall in profits.

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