The Dow and S&P 500 closed at record highs once again on Friday, propelled by encouraging GDP numbers. The unexpected jump in the U.S.’s economic growth helped benchmarks notch up their best week in three months. The industrials and technology sectors were the largest gainers among the S&P 500 industry groups, while materials incurred most of the losses.
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The Dow Jones Industrial Average (:DJI) gained 0.3% to close the day at 16,221.14. The S&P 500 rose 0.5% to finish Friday’s trading session at 1,818.32. The tech-laden Nasdaq Composite Index climbed 1.2% to end at 4,104.74. The fear-gauge CBOE Volatility Index (:VIX) decreased 2.54% to settle at 13.79. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 4.5 billion shares. Advancing stocks outnumbered the decliners. For 73% shares that advanced, only 24% declined.
According to the "third" estimate from the Bureau of Economic Analysis, the output of goods and services produced by labor and property in the United States increased at an annual rate of 4.1% in the third quarter of 2013. This was wider than the consensus estimate of 3.6%, and also above the 2.5% increase in real GDP in the second quarter. The second estimate for the increase in real GDP was 3.6%. The GDP report published on Friday showed an unanticipated increase in economic strength, most of which came from consumer spending.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, rose 1.8% in the third quarter. Real personal consumption expenditures increased 2.0% in the third quarter, compared with an increase of 1.8% in the second. Durable goods increased 7.9%, and nondurable goods increased 2.9%.
Last week, the central bank announced that it will reduce bond repurchases by $10 billion, bringing its monetary stimulus to $75 billion a month from Jan 2014. At the same time, the Fed also indicated that the key interest rate would continue to remain at a record low for a longer period than what was promised previously.
Federal Reserve Chairman Ben Bernanke said the central bank would introduce similar steps in its upcoming Federal Open Market Committee meetings. Bernanke said such reductions would continue if economic data continued to remain positive. He said the Fed would continue to maintain low borrowing rates in order to increase spending and propel growth. At the same time, such moves were aimed at pushing up the low level of inflation, he added.
Shares of Red Hat Inc. (NYSE:RHT) surged more than 14%, touching a 52-week high after the company posted robust fiscal third quarter results. The company’s earnings and revenues came in above the Street’s estimates. Earnings jumped 44.8% whereas revenues soared 15.4% from the year-ago period.
The industrials sector was one of the biggest gainers among the S&P 500 industry groups on Friday. The Industrials SPDR (XLI) gained 0.3%. Stocks such as General Electric Company (NYSE:GE), The Boeing Company (NYSE:BA), United Technologies Corporation (NYSE:UTX), 3M Co (NYSE:MMM), and United Parcel Service, Inc. (NYSE:UPS) increased 0.2%, 1.1%, 1.1%, 0.2%, and 0.2%, respectively.
Also, the technology sector joined industrials on the list of biggest gainers among the S&P 500 industry groups on Friday. The Technology SPDR (XLK) gained 0.3% as well. Stocks such as Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), QUALCOMM, Inc. (NASDAQ:QCOM), and Cisco Systems, Inc. (NASDAQ:CSCO) increased 0.8%, 1.3%, 1.5%, 0.7%, and 0.3%, respectively.
The materials sector incurred maximum losses. The Materials SPDR (XLB) lost 0.3%. Stocks such as Monsanto Company (NYSE:MON), E I Du Pont De Nemours And Co (NYSE:DD), The Dow Chemical Company (NYSE:DOW), International Paper Company (NYSE:IP), and Nucor Corporation (NYSE:NUE) decreased 0.1%, 0.3%, 0.3%, 1.0%, and 0.8%, respectively.
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