Wall Street makes history, rises above 18,000 for first time
Wall Street-NY (Dec 24) US stocks mostly rose at the close, carrying the Dow industrials above 18,000 for the first time, after data showed the US economy posted its strongest growth in more than a decade.
At the closing bell, the Dow Jones Industrial Average climbed 65 points, or 0.4 per cent, to 18,024. The S & P 500 index rose 4 points, or 0.2 per cent, to 2,082. Both leading indices secured new closing records.
Meanwhile, the Nasdaq Composite fell 16 points, or 0.3 per cent, to 4,765, dragged down by broad declines in healthcare stocks. The iShares Nasdaq Biotechnology exchange-traded fund slumped 4.3 per cent.
The Dow’s crossing of 18,000 is the latest milestone in the nearly six-year bull market. A close above 18,000 marks the fifth-quickest 1000-point rise for the blue-chip index. The fastest 1000-point rise was in 1999, when the Dow jumped to 11,000 in just 24 trading days. Going into today’s rally, it has been 119 trading days since the blue chips broke 17,000.
The blue chip index has rallied 890.57 points, or 5.2 per cent, over the last four trading days, through to yesterday’s (AEDT) close.
US stocks have pushed higher in 2014 with help from a robust US economy, healthier-than-expected corporate earnings and expectations that the Federal Reserve will continue to take a go-slow approach to raising interest rates. The latest leg higher in the stock market was sparked by the Fed’s most recent policy-setting meeting, in which officials signalled they would be patient with any rate increase, which is expected in the second half of next year.
Investors have also gravitated toward US stocks amid a slowdown of economic growth overseas, especially in Europe and China.
The US dollar rose against its rivals, while Treasury bonds declined, sending the 10-year yield up to 2.206 per cent.
ACCELERATING: US growth strongest in decade
The Commerce Department said that US third-quarter gross domestic product grew at an annual rate of 5.0 per cent. That is the strongest pace since the third quarter of 2003 and has been driven by robust consumer spending and business investment. Economists surveyed by The Wall Street Journal had expected an upward revision to 4.3 per cent growth.
In other positive economic news, data showed US consumer spending accelerated in November.
The data show “there’s a combination that is leading to a stronger consumer, which means better sales ... and better profits,” according to Alan Gayle, director of asset allocation at RidgeWorth Investments. Mr Gayle is overweight US stocks. While valuations in overseas markets are attractive, he said he has been deterred by soft economic data.
“The story is that the US economy and US markets are the best places to be,” he said.
Driving the S & P 500 higher were gains in materials stocks, which rose nearly 1 per cent.
Meanwhile, healthcare stocks were the only group in the S & P to post losses, down about 2 per cent. Healthcare stocks have been among the best performers this year, up about 23 per cent.
Gilead Sciences shares fell 3.3 per cent. Gilead has been hit by news that Express Scripts will make an AbbVie drug the exclusive option for patients with the most common form of hepatitis C. Gilead makes the hepatitis C treatment Sovaldi. Express Scripts said it negotiated to receive a discount from AbbVie on the wholesale price of its treatment.
Andrew Slimmon, managing director of Morgan Stanley Wealth Management’s Global Investment Solutions, said the sell-off in biotech reminded him of a similar episode back in the spring. The Nasdaq biotech ETF fell into bear-market territory in April, but has since rebounded.
Mr Slimmon, who owns biotech stocks in his strategies, said he remains positive on the healthcare sector as a whole. “Healthcare is a big winner for the year, so you get a little bit of bad news and people are kind of hitting the panic button,” he said.
Stocks have more than recovered from their early December pullback, which knocked the Dow down 5 per cent. The last weeks of the year tend to see stockmarket gains, as fund managers lagging behind their benchmarks scramble to boost performance by buying winning stocks.
“Statistically, this is a very strong time for the market,” Quincy Krosby, market strategist at Prudential Financial, said. “The Fed’s word ‘patient’ was an extra catalyst,” she said.
The stock market will close early tonight (AEDT) and will be closed for Christmas.
European stocks mostly rose, with the Stoxx Europe 600 index up 0.6 per cent. An outlier was the Greek market, where stocks fell after the Greek parliament failed to elect a president for the second time.
In commodity markets, crude oil futures rose 3.4 per cent to $US57.12 a barrel. Gold futures lost 0.2 per cent to $US1,178.10 an ounce.
Source: TheAustralian
