(Updates to midmorning)
By Denise Duclaux
NEW YORK, Sept 26 (Reuters) - Stocks rose at midmorning on Thursday as better-than-expected economic data and positive outlooks from companies including General Motors Corp. helped encourage investors after weeks of selling in the market.
"Today's market action is a pleasant surprise," said Alan Ackerman, chief market strategist at Fahnestock & Co. "As we approach the end of the month, which has been one of the worst in recent memory, investors and institutions are beginning to rotate funds into sectors they believe may do better over the next few quarters."
A triple dose of economic data took the edge off fears over the pace of the economic recovery. Orders for durable goods dipped in August but the drop was much smaller than expected. New jobless claims fell for the second straight week, and sales of new U.S. homes rose to a record level in August.
General Motors rose more than 3 percent and helped lead the Dow higher after a reassuring outlook from the European unit of the car giant. Nokia , the world's largest mobile phone maker, jumped more than 5 percent after forecasting growth in industrywide phone shipments.
The blue-chip Dow Jones industrial average rose 67 points, or 0.87 percent, to 7,909, rising for a second day after hitting a 4-year low on Tuesday. The broad Standard & Poor's 500 Index added 7 points, or 0.94 percent, to 847.
The Nasdaq Composite Index gained 1 point, or 0.11 percent, to 1,223, after dropping to a 6-year low earlier in the week. The technology-loaded index had rallied and then dipped briefly into negative ground.
A rally on Wednesday was a welcome respite after fears over a possible U.S. war on Iraq and the fragile economic recovery tossed the market lower for four straight weeks. But analysts warn those worries still dog the market, putting September on track to be the worst month of the year for the market.
General Motors jumped $1.33 to $40.90, helping lift the Dow. GM's European unit still aims to break even in 2003 as new products feed through its pipeline, despite missing 2002 targets, the head of the unit said.
Financial heavyweight J.P. Morgan Chase & Co. rose 51 cents to $19.40. Oil giant Exxon Mobil Co. gained 72 cents to $33.33. Computer leaders International Business Machines Corp. climbed $1.09 to $64.10. Credit card giant American Express Co. climbed 89 cents to $32.59. All four lifted the Dow.
Nokia rallied 70 cents, or almost 5 percent, to $13.95. The world's largest mobile phone maker expects industrywide mobile phone shipments to grow 10 percent to 15 percent in 2003 and each year after that, a company executive said.
Dutch semiconductor equipment maker ASML Holding rallied 22 cents to $6.68. The company repeated its guidance for second-half 2002, boosting its shares as concerns faded that it would miss its targets amid a stubborn chip sector slump.
Chip maker Microchip Technology Inc. rallied $1.01, or more than 5 percent, to $20.51. The company reaffirmed its guidance for the current fiscal second quarter.
Household goods retailer Bed Bath & Beyond Inc. rose $1.02 to $34.70. The company's quarterly earnings rose 40 percent, above Wall Street expectations, lifted by consumers' growing focus on the home following Sept. 11 and amid low mortgage rates.
Supermarket chain Safeway Inc. jumped $1.29, or more than 6 percent, to $22.60. The company reported a 9 percent decline in quarterly profit but beat Wall Street's estimates by a penny and said it is comfortable with analysts' fourth-quarter forecasts.