US stocks soar to new record as growth accelerates

NEW YORK: The Dow stock index closed above 18,000 for the first time ever on Tuesday (Dec 23) 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.

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."

Tuesday's record was the Dow's 36th in 2014, according to S&P Dow Jones Indices. The latest spate of equity records follow Wednesday'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.