While you were sleeping: US growth accelerates

While you were sleeping: US growth accelerates

Dec. 24 (BusinessDesk) - Wall Street rose, pushing both the Dow and the S&P 500 to record highs, after a report showed the US economy expanded more than forecast in the third quarter, growing at the fastest pace since 2003, bolstering optimism about the outlook.

A Commerce Department report showed US gross domestic product grew at a 5 percent annual rate, up from a previously estimated 3.9 percent.

"After four years of rocky recovery the US economy is now hitting its stride ... and growth should remain good next year, with lower gasoline prices a big plus for consumers,” Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh, told Reuters.

Separately, another Commerce Department report showed US consumer spending climbed 0.6 percent in November, after rising 0.3 percent in October.

Even so, a third Commerce Department report showed orders for durable goods unexpectedly dropped, sliding 0.7 percent in November.

"What was most interesting about that is if you dig in the details the primary surprise came from consumption,” Scott Keifer, global investment specialist at JP Morgan Private Bank in Orange County, California, told Reuters. "You are going to see the consumer spending number continue to inch up and get better and better as we continue on in this expansion."

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.51 percent, the Standard & Poor’s 500 Index gained 0.24 percent. The Nasdaq Composite Index fell 0.24 percent. The Dow touched a record high 18,056.85, while the S&P 500 climbed to a record 2,085.61.

“The US continues to defy the rest of the developed world,” Daniel Weston, chief investment officer at Aimed Capital in Munich, told Bloomberg News. “The way the US machine keeps plowing ahead impresses equity investors, who have the momentum behind them to close the year at record highs.”

Shares of Coca-Cola rose, last up 1.6 percent, after the Wall Street Journal reported that the company plans to cut at least 1,000 to 2,000 jobs globally in the coming weeks, and will introduce stricter budgeting, asking executives to swap limousines for taxis and cancelling its Christmas party for Wall Street analysts. The moves are part of a US$3 billion cost-cutting plan Coke announced in October, the report said.

In Europe, the Stoxx 600 Index finished the day with a 0.6 percent increase from the previous close. The UK’s FTSE 100 Index added 0.3 percent, Germany’s DAX Index climbed 0.6 percent, while France’s CAC 40 Index rallied 1.4 percent.

Bucking the trend, Greece’s ASE Index dropped 1.7 percent after Prime Minister Antonis Samaras failed to secure the support needed for his nominee for president in a second parliamentary vote, leaving a third and final chance on December 29. Failure would mean early elections and a likely shift in power to the Syriza party, which wants to renegotiate the country’s bailout from the European Union and the International Monetary Fund.

(BusinessDesk)

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