Stocks Open Higher on Economic Recovery Hopes

The U.S. economy shrank by 6.3% in the 4th quarter, but the dismal results were better than expected. Some economists see a recovery by the end of this year. The Dow rose 38 points to 7788 while Nasdaq surged 21 points to 1550.

On the upside

Best Buy (Nasdaq: BBUY) posted lower 4th quarter profits, but revenues rose 10% which beat expectations for the world's largest consumer electronics retail chain.

ConAgra Foods (NYSE: CAG) reported lower profits due to rising commodity prices, but revenues also rose.

Shares of Red Hat (NYSE: RHAT) surged after the open source software provider posted 4th quarter profits that topped estimates.

On the downside

Treasury Secretary Timothy Geithner unveiled plans to give the federal government more power to regulate hedge funds. The financial services sector edged lower with shares of Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) losing ground.

Morgan Stanley (NYSE: MS) and Mitsubishi UFJ Financial Group (NYSE: MTU) announced plans to merge their Japanese-based brokerage units by next spring.

Shares of CKE Restaurants (NYSE: CKR) drifted lower after the company which operates Hardee's and Carl's Jr. fast-food restaurants posted lower revenues and a slim profit.

In the broad market, advancing issues outpaced decliners by a margin of more than 2 to 1 on the NYSE and by 5 to 2 on Nasdaq. The Russell 2000 which tracks small cap stocks added 5 points to 431.