Dow Average Tops 18,000 for First Time as GDP Tops ViewsJoseph Ciolli
The Dow Jones Industrial Average rose above 18,000 for the first time as faster-than-forecast growth in gross domestic product boosted confidence in the economy as the Federal Reserve pledges patience with interest rate increases.
Technology companies have had some of the biggest gains in the Dow this year with Intel Corp. rising more than 43 percent and Microsoft Corp. jumping 28 percent. 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.
The Dow rose 50.54 points, or 0.3 percent, to 18,009.98 at 9:31 p.m. in New York. The Standard & Poor’s 500 Index gained 0.3 percent to 2,083.72.
“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 in a phone interview. “The Fed is part of the fueling of everything, and you have to couple that with the year-end push.”
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 the New York-based S&P Dow Jones Indices.
The Dow closed at an eight-month low on Oct. 16 before rallying more than 1,882 points, or 12 percent, to today’s record.
The gauge has risen about 175 percent during the five-year bull market that began in March 2009, propelled by better-than-estimated corporate results and three rounds of Fed bond purchases. The S&P 500 has more than tripled in that time.
Nike, Visa Inc., Home Depot and Intel have paced gains during the gauge’s run to 18,000 in the second half of the year, with each rallying more than 19 percent from July 3 through yesterday. Caterpillar Inc. and Chevron Corp. have been the worst performers, with slumps of more than 14 percent in that period.
The industrial gauge has climbed about 9 percent this year, almost three times more than the Russell 2000 Index of small-cap companies.
Stocks started to rally last week after the Fed said it will be patient on the timing of a rate increase even as U.S. growth shows signs of accelerating. Chair Janet Yellen said any spillover from the situation in Russia is likely to be small, while the central bank’s policy statement didn’t mention turmoil sparked by tumbling oil prices.
Equity benchmarks have rallied to records, with the S&P 500 rebounding 12 percent from a low in October, amid speculation the U.S. economy is strong enough to withstand a slowdown overseas and will benefit from Fed’s patience in raising interest rates.
Data today showed the world’s largest economy expanded at the fastest pace in more than a decade, as U.S. consumers and businesses spent more than previously estimated.
Gross domestic product grew at a 5 percent annual rate from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9 percent, revised figures from the Commerce Department showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg projected a 4.3 percent increase.