US stocks soar to new record highs
Stock traders in the New York Stock Exchange (NYSE) in New York City on October 17, 2014. The Dow stock index closed above 18,000 for the first time ever on December 24, 2014 after government data estimated third-quarter US economic growth at a spectacular five per cent. PHOTO | JEWEL SAMAD |
What you need to know:
- 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 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.
- The day’s weakest sector was pharmaceuticals, including Dow members Pfizer and Merck as well as biotech companies Celgene and Biogen.
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.
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.
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.
