* Optimism about global interest-rate cuts buoy sentiment
* GDP data shows U.S. economy shrank less than expected
* Hunt for bargains lifts mood but recession fear abounds
* Colgate-Palmolive, Exxon Mobil top profit estimates
* Dow up 1.2 pct, S&P 500 up 1.4 pct, Nasdaq up 1.1 pct
(Updates to midday)
By Ellis Mnyandu
NEW YORK, Oct 30 (Reuters) - U.S. stocks rose on Thursday
as investors bet that a spate of worldwide interest-rate cuts
by central banks, including the Federal Reserve, will help
reduce the impact of a global recession.
While the rate cuts should drive down borrowing costs for
businesses and consumers, investors also found support from
signs that efforts to unlock jammed credit markets continued
to free up cash needed to avert a sharp downturn.
"The Fed gave the market what it wanted but it seems that
whenever we see big rallies, the bears use them as an
opportunity to sell," said Ryan Detrick, senior technical
strategist at Schaeffer's Investment Research in Cincinnati,
Ohio.
"There's still a lot of headwinds for the market, with
concerns about what is likely to be the worst Christmas in a
long time. The Fed has given the patient a lot of medicine,
now we want to see the patient show a recovery."
The Dow Jones industrial average <> rose 103.79
points, or 1.15 percent, to 9,094.75. The Standard & Poor's
500 Index <.SPX> gained 13.00 points, or 1.40 percent, to
943.09. The Nasdaq Composite Index <> climbed 18.78
points, or 1.13 percent, to 1,675.99.
A search for beaten-down shares lifted interest-rate
sensitive sectors, including financials, with Citigroup <C.N>
up 1.5 percent at $12.94, and home builders, with luxury home
builder Toll Brothers <TOL.N> , up 4.1 percent at $20.98.
The gains came a day after the Fed cut its benchmark fed
funds rate for overnight bank loans by 50 basis points, or a
half-percentage point, to 1 percent.
Although all three major U.S. stock indexes had climbed 1
percent at midday, they were off session highs as some
investors opted to sell into the apparent strength.
Earlier in the session, the Dow touched a session high of
9,266.47, up 275.50 points, or 3.1 percent, from Wednesday's
close. The S&P 500 had reached a session high at 963.23, up
3.6 percent from Wednesday's close, while the Nasdaq had risen
as high intraday as 1,712.56, up 3.3 percent from Wednesday's
close.
Investors remain concerned that the efforts to shore up
the economy might take longer to yield sustainable results and
brighten the profit picture.
On Nasdaq, shares of Apple Inc <AAPL.O>, maker of the
iPhone and iPod, rose 5.9 percent to $110.64.
Technology shares are among the sectors that analysts see
poised to be the biggest beneficiaries in an economic
revival.
But shares of big manufacturers, including Boeing <BA.N>,
headed lower. Boeing, a Dow component, was down 1.3 percent at
$49.16.
The stocks of big retailers also slid, with Wal-Mart
Stores <WMT.N> off 1.6 percent at $54.15, and Target Corp
<TGT.N> down 4.4 percent at $38.94.
Thursday's government data helped underscore why the Fed
deemed it necessary to cut rates on Wednesday.
Data showed that gross domestic product, which measures
the output of all goods and services within U.S. borders,
experienced its sharpest contraction in seven years in the
third quarter, but the slippage was slightly less than
expected.
The Fed's easing on Wednesday was shortly followed by rate
cuts in Taiwan and Hong Kong. China cut rates on Wednesday. For details, see []
Japan is expected to cut rates on Friday, while the
European Central Bank, the central bank of Australia and the
Bank of England are expected to cut rates next week.
Shares of consumer products maker Colgate-Palmolive Co
<CL.N> rose 6.7 percent to $63.99 on the NYSE after the
company's quarterly profit beat estimates.
Exxon Mobil <XOM.N> also beat profit estimates, but its
stock succumbed to profit-taking, falling 2.5 percent to
$72.76.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)
