Dow Average Tops 18,000 on U.S. Economy as Bonds RetreatJeremy Herron and Joseph Ciolli
U.S. stocks rose, with the Dow Jones Industrial Average rallying past 18,000 for the first time, after data showed the world’s largest economy grew at the fastest pace since 2003 last quarter. Treasuries declined with gold, while the dollar and crude oil advanced.
The Dow gained 64.73 points to 18,024.17 by 4 p.m. in New York as the Standard & Poor’s 500 Index climbed 0.2 percent to a record 2,082.17. A plunge in biotechnology shares sent the Nasdaq 100 Index down 0.3 percent. The Stoxx Europe 600 Index rose a sixth day, its longest rising stretch since April. Yields on 10-year Treasuries climbed 11 basis points to 2.27 percent and gold futures lost 0.2 percent. The Bloomberg Dollar Spot Index jumped to a five-year high as U.S. oil surged 3.4 percent.
The U.S. economy expanded an annualized 5 percent in the third quarter, beating the highest forecast among 75 economists surveyed by Bloomberg as consumers and businesses spent more than was previously estimated. The benchmark S&P 500 extended a rally sparked last week by the Federal Reserve’s pledge to be patient on the timing of interest-rate increases. A sustained pickup in U.S. growth may anchor the global economy as Europe flounders and emerging markets, including China, cool.
“The market was roaring yesterday, and going into the end of the year it keeps pushing higher,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said by phone. “These numbers are adding fuel to the fire. The Fed is part of the fueling of everything, and you have to couple that with the year-end push.”
The annualized growth rate was revised up from a previous estimate of 3.9 percent, and was the biggest advance in gross domestic product since the third quarter of 2003. Separate data today showed consumer spending rose more than previously estimated in the period, while orders for U.S. durable goods and purchases of new U.S. homes unexpectedly declined last month.
The dollar rose and Treasuries fell on speculation the data, along with higher employment and lower gasoline prices, support the case for the Fed to raise benchmark rates next year.
Two-year Treasury note yields rose two basis points, or 0.02 percentage point, to 0.74 percent, after reaching their highest level since April 2011. Gold futures slipped for a second day, declining to $1,178 an ounce as the strengthening U.S. economy crimped demand for the precious metal as an alternative investment.
The Bloomberg dollar index, which tracks the U.S. currency against 10 major peers, rose 0.5 percent to the highest closing level since March 2009 as the greenback advanced for a fifth day against the yen, its longest rally in a month.
The dollar climbed 0.5 percent to 120.68 yen, while the euro slipped 0.5 percent to $1.2172. Japanese markets were shut for a holiday.
It’s been 172 days since the Dow closed above 17,000 on July 3, data compiled by Bloomberg show. That’s the fifth-fastest trip between thousands, with the record being 35 days to 11,000 in May 1999. It took the index almost 5,200 days to go from 1,000 to 2,000 between 1972 and 1987, according to Howard Silverblatt, an index analyst at New York-based S&P Dow Jones Indices.
Technology companies have had some of the biggest gains in the Dow this year with Intel Corp. rising more than 44 percent and Microsoft Corp. jumping 29 percent. Apple Inc. is up 40 percent this year. Consumer companies such as Home Depot Inc., Walt Disney Co. and Nike Inc. have also risen at least 22 percent to lead the 30-stock gauge’s advance in 2014.
The Dow closed at a eight-month low Oct. 16 before rallying more than 1,882 points, or 12 percent, to today’s record.
Nine of the 10 main S&P 500 groups advanced today, led by energy and mining shares. Health-care stocks sank 2.2 percent as Celgene Corp., Regeneron Pharmaceuticals Inc. and Biogen Idec Inc. each plunged at least 4.3 percent.
The S&P 500 and Dow average climbed back to record levels yesterday as investors continued to process the Fed’s messaging on borrowing costs. Sliding oil prices and the financial crisis in Russia rippled through financial markets earlier this month, wiping more than $1 trillion from U.S. equity values in less than two weeks.
The S&P 500 lost 5 percent in the seven trading days through Dec. 16. Yesterday’s gains in the index completed the fifth recovery this year from a decline of 4 percent or more, only 17 days after it started. In comparable drops beginning in January, April, July and September, the benchmark gauge needed about a month to erase losses, data compiled by Bloomberg show.
The S&P 500 is up 0.7 percent in December and has gained 13 percent this year. It has climbed 5.6 percent the past five sessions, its biggest increase over a similar period since December 2011, data compiled by Bloomberg show.
WTI crude rose to $57.12 a barrel in New York, its highest settlement since Dec. 12. Brent crude added 2.6 percent to $61.69 a barrel in London after slipping 2.1 percent last session.
Oil inventories in the U.S., the world’s largest oil consumer, probably dropped for a second week through Dec. 19, a Bloomberg News survey of energy analysts showed before data due from the government tomorrow. Crude prices are down more than 40 percent this year as the biggest U.S. output in about three decades collides with slowing global demand for the commodity.
Europe’s Stoxx 600 capped its biggest six-day gain in three years and has regained 6.4 percent from its Dec. 15 low.
Greek bonds fell as Prime Minister Antonis Samaras failed in his second attempt to get lawmakers to back his nominee for president, thereby averting snap general elections. Yields on 10-year Greek debt rose 15 basis points to 8.33 percent.
Rates on German 10-year bonds fell one basis point to 0.59 percent, about three basis points from a record low.
The ruble strengthened for a third day, advancing 2.3 percent to 54.5035 a dollar on speculation the government has ordered companies to convert more of their foreign revenue into rubles amid efforts to recover from the nation’s worst currency crisis since 1998.
Russia instructed five state-controlled exporters, including OAO Gazprom and OAO Rosneft, to reduce their foreign exchange holdings by March 1, Kommersant newspaper reported, citing a Dec. 17 directive from Prime Minister Dmitry Medvedev.
S&P said it’s considering reducing Russia’s credit rating, with a 50 percent chance the nation’s debt will be lowered from investment grade to junk within 90 days, according to a statement from the ratings agency. Oil prices near a five-year low and international sanctions over Russia’s involvement in the Ukraine conflict have hobbled the economy of the world’s largest energy exporter.
Emerging-market stocks fell today, with the MSCI Emerging Markets Index dropping 0.6 percent after four days of gains.
The Shanghai Composite Index slumped 3 percent, paring its surge over the past month to 20 percent. Hong Kong’s Hang Seng Index fell 0.3 percent and the Hang Seng China Enterprises Index, which tracks mainland Chinese shares listed in the city, fell 0.6 percent. Dubai’s DFM General Index lost 3.4 percent, taking this quarter’s plunge to 26 percent.