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Business News/ Market / Stock-market-news/  Dow Industrial Average tops 18,000, Treasuries fall on GDP data
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Dow Industrial Average tops 18,000, Treasuries fall on GDP data

The Standard & Poor's 500 climbed 0.4% to a record at 9:30am in New York, while the Dow average added 46.72 points to 18,006.16

The world’s largest economy surged by 5% in the third quarter, expanding at the fastest pace since the same period of 2003, as US consumers and businesses spent more than previously estimated. Photo: AFPPremium
The world’s largest economy surged by 5% in the third quarter, expanding at the fastest pace since the same period of 2003, as US consumers and businesses spent more than previously estimated. Photo: AFP

London/New York: US stocks rose a fifth day, sending the Dow Jones Industrial Average past 18,000 for the first time, while Treasuries fell as data showed the economy grew at the fastest pace in a decade. European equities extended a rally, the ruble advanced and oil climbed.

The Standard & Poor’s 500 climbed 0.4% to a record at 9:30am in New York, while the Dow average added 46.72 points to 18,006.16. The Stoxx Europe 600 Index increased 0.5%, heading for its sixth gain in longest winning streak since April. The yield on 10-year Treasury notes added four basis points to 2.19%. The Bloomberg Dollar Spot Index held near a five-year high, while the ruble strengthened 2.3% as oil advanced. Greek bonds fell as the nation failed to elect a president.

The world’s largest economy surged by 5% in the third quarter, expanding at the fastest pace since the same period of 2003, as US consumers and businesses spent more than previously estimated. The S&P 500 soared 5.4% over the previous four days after the Federal Reserve’s pledge to be patient on the timing of interest-rate increases helped stocks recover from a plunge earlier this month. The US publishes oil inventories on Wednesday.

“The US economy is really on track to continue to grow at a healthy pace," David Wartenweiler, chief investment officer at Habib Bank AG, said by telephone from Zurich. “Part of the rebound we’re now witnessing has to do with the realization that the selloff was overdone."

Equities rebound

It’s been 172 days since the Dow closed above 17,000 on 3 July, 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 a eight-month low on 16 October before rallying more than 1,882 points, or 12%, to Tuesday’s record.

The S&P 500 and Dow average climbed back to record levels on Monday after a slide in oil prices and a worsening of the financial crisis in Russia rippled through financial markets earlier this month, wiping more than $1 trillion from US equity values in less than two weeks.

The S&P 500 lost 5% in the seven trading days through 16 December. Monday’s gains in the index completed the fifth recovery this year from a decline of 4% 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.

Roaring market

The S&P 500 ended on Monday up 0.5% for December and 12% this year.

“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. “These numbers are adding fuel to the fire. The Fed is part of the fuelling of everything, and you have to couple that with the year-end push."

Gross domestic product grew at a 5% annual rate from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9%, revised figures from the commerce department showed on Tuesday in Washington. The median forecast of 75 economists surveyed by Bloomberg projected a 4.3% increase.

Separate data showed orders for US durable goods unexpectedly declined in November as corporate investment stagnated and demand weakened for military equipment.

Europe equities

The Stoxx 600 is heading for its biggest six-day gain in three years and has regained 6% from its 15 December low. The volume of shares on the gauge changing hands was 37% below the 30-day average, data compiled Bloomberg show.

Greek bonds fell as Prime Minister Antonis Samaras failed in his second effort to get lawmakers to back his nominee for president and avert snap general elections. Greek 10-year yields rose four basis points to 8.36%, and the five-year note rate increased 20 basis points to 8.77%.

The yield on German 10-year bonds fell one basis point to 0.59%, about 3 basis points from a record low, while that on similar-maturity US Treasuries was at 2.16%.

Oil rose, with West Texas Intermediate climbing 1.3% to $55.19 a barrel, after falling 3.3% on Monday. Prices are down 43% this year. Brent crude added 1.1% to $60.78 a barrel after slipping 2.1% last session.

Oil price

Oil inventories in the US, the world’s largest consumer, probably dropped for a second week through 19 December, a Bloomberg News survey of energy analysts showed before data on Wednesday.

Iraq plans to boost production to 4 million barrels a day next year as Opec refuses to cede market position, Oil minister Adel Abdul Mahdi said in an interview on Monday. Opec members Saudi Arabia and the United Arab Emirates have pledged to maintain output, while Qatar’s energy minister has said the market is oversupplied by 2 million barrels a day. The 12-member group is responsible for about 40% of the world’s supply.

The yen dropped as much as 0.1% on Tuesday to 120.18 per dollar, its weakest level since 9 December. The dollar appreciated 0.1% to $1.2212 per euro, the strongest level since August 2012. The Bloomberg Dollar Spot Index on Monday posted the highest close since March 2009.

Ruble gains

The ruble strengthened for a third day, advancing to 54.5250 a dollar on speculation the government ordered companies to convert more of their foreign revenue into rubles amid efforts to recover from the nation’s worst currency crisis since 1998. The yield on five-year government bonds rose seven basis points to 15.2%.

Russia instructed five state-controlled exporters, including OAO Gazprom and OAO Rosneft, to reduce their foreign exchange holdings by 1 March, the Kommersant newspaper reported, citing a 17 December directive from Prime Minister Dmitry Medvedev.

Emerging-market stocks fell, with the MSCI Emerging Markets Index dropping 0.5%. Dubai’s DFM General Index lost 3.4%, taking this quarter’s plunge to 26%.

The Shanghai Composite Index slumped 3%, paring its surge over the past month to 20%. Hong Kong’s Hang Seng Index fell 0.3% and the Hang Seng China Enterprises Index, which tracks mainland Chinese shares listed in the city, lost 0.6%. Japan’s markets were shut for a holiday.

Gold gained 0.1% to $1,177.18 an ounce on the spot market after sinking as much as 2.1% on Monday to $1,170.76, the lowest intraday level since 1 December. Bloomberg

Jonathan Burgos and Weiyi Lim in Singapore, Cecile Vannucci, David Goodman, Natasha Doff and Inyoung Hwang in London and Joseph Ciolli in New York contributed to this story.

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Published: 23 Dec 2014, 08:28 PM IST
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