Wall Street Rallies After Strong GDP Growth

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Wednesday, October 31, 2007 12:38 PM

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NEW YORK -- Stocks rebounded in a quiet session Wednesday from a pullback a day earlier as investors awaited the results of the Federal Reserve's two-day meeting on interest rates and cheered a better than expected reading on third-quarter growth.


The Commerce Department said the country's gross domestic product grew at an annual rate of 3.9 percent in the third quarter, a faster pace than the 3 percent growth economists forecast, on average. The report may have calmed some investor concerns about the economy's health ahead of the Fed's rate decision, which is due at 2:15 p.m.


In another economic reading, construction spending had its best showing in four months.


Wall Street widely expects the Fed to cut its benchmark federal funds rate by a quarter point. Although oil hit a fresh high Wednesday, and inflation remains a concern, the central bank has indicated that tighter credit conditions and a housing slump pose a threat to economic growth. The Fed could lower rates to stimulate business activity amid the turmoil.


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