US stocks logged their best one-day percentage gain in three months yesterday as investors saw data showing the US economy returned to growth in the third quarter as brightening the outlook for profits.<br /><br />The government’s first estimate of US gross domestic product showed the economy expanded at an annual rate of 3.5 per cent in the third quarter, suggesting it was emerging from the worst recession in 70 years. <br /><br />The quarter of growth was the first after more than a year of contraction in GDP. Equity gains were widespread, with big manufacturers, technology, financials, energy and the materials sectors all benefiting. <br /><br />The S&P 500 and the Nasdaq halted a four-day rout.<br /><br />Sentiment was also boosted by stronger-than-expected quarterly results from consumer product heavyweights Procter & Gamble Co and Colgate-Palmolive Co.<br /><br />The GDP report served as more affirmation of investors’ recent bets on the recovery, which fueled a sharp advance from the 12-year lows of early March.<br /><br />“We see today that the optimism about corporate earnings reports is just being confirmed in the GDP report,” said Kenneth Kamen, president of Mercadien Asset Management in Hamilton, New Jersey. <br /><br />He added: “We are starting to see the economy really recover and GDP picking up.”<br /><br />The Dow Jones industrial average gained 199.89 points, or 2.05 per cent, to end at 9,962.58. <br /><br />The Standard & Poor’s 500 Index jumped 23.48 points, or 2.25 per cent, to 1,066.11 -- marking its biggest one-day percentage gain in three months. The Nasdaq Composite Index shot up 37.94 points, or 1.84 per cent, to close at 2,097.55.<br /><br />Weakness in the US dollar also underpinned Thursday’s stock action as the appetite for riskier assets resurfaced.<br /><br />The CBOE Volatility Index, Wall Street’s most closely watched gauge of investor fear, slid 11.3 per cent, its biggest one-day percentage drop in eight months.<br /><br />Economists in a recent poll last week expected GDP to gain 3.3 per cent, although some recent data led many to trim forecasts this week.