NEW YORK
The Dow stock index
closed above 18,000 for the first time ever Wednesday after government
data estimated third-quarter US economic growth at a spectacular five
per cent.
The blue-chip index crossed its latest
threshold within moments of the market opening and stayed above 18,000
the rest of the session, continuing a so-called “Santa Claus rally” that
began after last week’s US Federal Reserve meeting.
The Dow Jones Industrial Average finished at 18,024.17, up 64.73 points (0.36 per cent).
The
broad-based S&P 500 also notched a fresh record, gaining 3.63
points (0.17 per cent) to 2,082.17, while the tech-rich Nasdaq Composite
Index dropped 16.00 (0.33 per cent) to 4,765.42.
BEST RECORD IN 10 YEARS
At five per cent, US growth for the third quarter was the best since 2003. The figure, described as “mind-blowing” by one analyst, was also better than the 3.9 per cent previously estimated by the government and the 4.3 per cent projected by analysts.
At five per cent, US growth for the third quarter was the best since 2003. The figure, described as “mind-blowing” by one analyst, was also better than the 3.9 per cent previously estimated by the government and the 4.3 per cent projected by analysts.
Spending for
consumption rose 3.2 per cent, the biggest jump since the end of 2013.
Analysts also cited strong growth in defence spending and exports.
The
US growth figures showed “an economy firing on all cylinders for the
first time in many quarters,” said Chris Low, chief economist at FTN
Financial.
However, the good cheer was offset somewhat
by US durable goods orders — an indicator of business investment — which
fell 0.7 per cent in November.
Low said the durable
goods orders implies that fourth-quarter capital spending will decline,
perhaps sharply, “suggesting blockbuster growth in the third quarter
will be followed by a distinctly slower Q4.”
WEAKEST SECTOR
Wednesday’s record was the Dow’s 36th in 2014, according to S&P Dow Jones Indices.
Wednesday’s record was the Dow’s 36th in 2014, according to S&P Dow Jones Indices.
The
latest spate of equity records follow Thursday’s Fed meeting, at which
the US central bank kept interest rates low, gave a fairly upbeat
assessment of the economy and said it would be “patient” before raising
rates.
Standout sectors Wednesday included large
banks, such as Dow member JPMorgan Chase and Wells Fargo. Retail stocks
Macy’s and TJX Companies also advanced, as did petroleum companies
ExxonMobil and Chevron as oil prices rallied from recent lows.
The
day’s weakest sector was pharmaceuticals, including Dow members Pfizer
and Merck as well as biotech companies Celgene and Biogen. Investors
fear a price war among pharma companies after prescription management
company Express Scripts replaced a hepatitis drug of Gilead Sciences
with a lower-cost alternative from rival AbbVie.
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