US open: Dow jumps 220 points as Wall Street stretches gains after GDP data

US stocks rallied early on Thursday, as Wall Street looked to build on the previous session’s rally, while positive GDP data fueled further gains.

Just before 1500 BST, the Dow Jones Industrial Average was up 220 points to 16,505.55, while the S&P 500 and the Nasdaq were 73 and 191 points higher respectively.

US stocks closed higher on Wednesday as the country’s main benchmarks snapped a six day losing streak due to sentiment recovering across the board.

“The events of the past week have led traders to believe that interest rates will not rise in the US next month, and after Dudley’s remarks yesterday dealers are now not so sure if there will even be a rate rise this year,” said IG’s market analyst David Madden.

Thursday data

According to the Commerce Department, the US gross domestic product was revised to have grown 3.7% in the second quarter, compared with an initial estimate of 2.3% and ahead of analysts’ expectations calling for a 3.2% increase.

Consumer spending was also revised upward, rising from 2.9% to 3.1%, while corporate profits climbed 2.4% in the second quarter after declining 5.8% in the previous three months.

"We don’t think a September rate hike is completely off the table, but we’ll just have to wait and see what officials have to say at this weekend’s Jackson Hole gathering," said Paul Ashworth, chief US economist at Capital Economics.

Meanwhile, in the week ended 22 August initial claims declined by 6,000 to reach 271,000, according to figures published by the Department of Labor, falling below the 275,000 level analysts expected.

The figure marked the 25th consecutive week initial claims have remained below the 300,000 level, the longest stretch in 15 years.

The index from the National Association of Realtors (NAR) climbed 0.5% month-on-month in July, reversing the previous month's decline and climbing 7.3% year-on-year.

Both figures, however, were below the 1.0% month-on-month gain and the 8.4% increase on a yearly basis analysts had expected.

Oil prices rebound

Elsewhere, Chinese shares led markets around the region upwards, as a late rally saw the Shanghai Composite rise by 5.35% to snap a five-day rout, while European stocks were also higher.

The dollar edged higher against the main currencies, gaining 0.44% and 0.92% against the yen and the euro respectively and climbing 0.38% against the pound.

Gold futures shed 0.32% to $1,121.00, while oil prices surged, as both West Texas Intermediate and Brent jumped 3.4% to $39.92 a barrel and $44.66 a barrel respectively.

In company news, shares in St Jude Medical jumped 4.50% after reports that Abbott Laboratories could buy the maker of medical devices.

Abbott Laboratories, which denied the report just before the opening bell, saw its shares climb 2.89%.

Software maker Workday climbed 1.35%, even though a weak billings forecast left analysts unimpressed, while Tiffany & Co lost 3.73% after disappointing quarterly report.

The earning season continues, with apparel retailer Aeropostale, video game and consumer electronics GameStop and firearm producer Smith & Wesson Holding on tap after the close.