Dow Tops 18,000 Market Reaches New Highs

NEW YORK (AP) — The Dow Jones industrial average broke through 18,000 points for the first time Tuesday as the stock market continued a late-year march to record highs.

         Investors welcomed the latest encouraging news on the economy as the government said the U.S. grew at the fastest pace in more than a decade in the third quarter. The market is heading for its fifth straight gain as indexes recover the last of the ground they lost in an early-December slump.

 

KEEPING SCORE: The Dow Jones industrial average rose 86 points, or 0.5 percent, to 18,045 as of 11:50 a.m. Eastern time. The Standard & Poor's 500 gained five points, or 0.3 percent, to 2,083. The Nasdaq composite fell five points, or 0.1 percent, to 4,776.

 

STRONG FINISH: The market has bounced back after a rough patch earlier this month. The latest rally comes as investors have been encouraged by signs of strength in the U.S. economy and reassurances that the Federal Reserve won't interest rates soon. The all-time highs set by the Dow and S&P 500 on Monday are the latest in a string of record highs set by the indexes this year as Wall Street pushes toward the sixth year of the current bull market.

 

THE QUOTE: Despite being at record highs, stocks are not overvalued, said Cameron Hinds, regional chief investment officer at Wells Fargo Private Bank.

         "You have to understand that U.S. economic output is at an all-time high and corporate profits are at an all-time high," Hinds said. "Bull markets typically don't die purely of old age, they tend to die of recessions and overvaluation and perhaps policy mistakes, and we don't see any of those on the horizon."

 

GROWTH SPURT: The Commerce Department reported that the economy grew at a 5 percent annual rate in the July-September period, powered by stronger consumer spending and business investment. That's the fastest quarterly growth since the summer of 2003.

 

ECONOMIC BAROMETERS: Investors were monitoring a mixed bag of economic reports Tuesday. Consumer spending grew at the fastest pace in three months in November, while income posted the best gain in five months. Factory orders for long-lasting manufactured goods declined last month. And sales of new homes slid 1.6 percent in November to a seasonally adjusted annual rate of 438,000, the second consecutive monthly decline.

 

HEALTH CARE SLUMP: Several health care stocks were ailing on Tuesday, weighing down the Nasdaq. Among them was Gilead Sciences. The stock tumbled for the second day in a row following a decision by Express Scripts, the nation's largest pharmacy benefits manager, to restrict coverage of two of Gilead's drugs that cost more than $80,000 each for a full course of treatment. Gilead shed $4.88, or 5.2 percent, to $88.02. Regeneron Pharmaceuticals, Celgene and Biogen were among the other pharmaceutical stocks taking a beating. Regeneron fell $24.92, or 6 percent, to $388.05, while Celgene shed $6.81, or 6 percent, to $106.69. Biogen fell $17.62, or 5 percent, to $334.67.

 

GOOD MEDICINE: Shares in Walgreen rose after the drug store chain reported better-than-expected fiscal first-quarter earnings. The stock rose 76 cents, or 1 percent, to $74.96.

 

HOLIDAY SEASON: Trading volume is expected to thin out the next couple of days as the market shifts into Christmas holiday mode. On Wednesday, U.S. and European markets close early.

 

OVERSEAS ACTION: In Europe, France's CAC-40 added 1.3 percent and Germany's DAX rose 0.4 percent. Britain's FTSE rose 0.5 percent. In Asia, the Shanghai Composite Index closed down 3 percent, while Hong Kong's Hang Seng shed 0.3 percent and Seoul's Kospi lost 0.2 percent. India's Sensex declined 0.6 percent.

 

ENERGY: Oil prices stabilized after a recent rout. Benchmark U.S. crude rose 96 cents to $56.22 per barrel.

 

BONDS: U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.20 percent.

         – by AP Reporter Alex Veiga

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