By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose on Friday as the data
revisions showed the economy grew faster than expected in the third
quarter, setting the stage for the S&P 500 and the Dow Jones
Industrial Average to reach new all-time highs.
Investors greeted the upward revision to GDP as a welcome
backdrop for future earnings growth.
The U.S. economy expanded at an annual rate of 4.1% in the third
quarter, its fastest pace in two years owing to stronger consumer
spending and business investment than previously reported,
according to newly revised government figures.
The Dow Jones Industrial Average (DJI) aimed for the third
record close in a row -- its highest inflation-adjusted level. The
Dow rose 88 points or 0.5% up to 16,265.24 and poised for a 3.2%
weekly gain.The S&P 500 index (SPX) rose, hitting a fresh
intraday high. On pace for a record close the benchmark rose 11
points or 0.6% to 1,820.72 and was set to record a 2.6% weekly gain
after two straight weeks of losses. Nasdaq Composite (RIXF) rallied
41 points, or 1%, to 4,099.65.
"Now that all the distractions are behind us -- the Affordable
Care Act and its botched implementation, the budget debate, debt
ceiling, and this week the Fed -- it seems like the markets can
finally focus on fundamentals," said Drew Wilson, investment
analyst at Fenimore Asset Management.
"Today's upward revision to GDP along with earlier economic data
shows that the economy is recovering and it is a big positive for
markets. As multiples are thinly stretched, earnings power will now
come from stronger growth," he added.
Thursday saw a mixed trading session, with the Dow average
closing at its 46th record of the year, while the two other
benchmarks inched lower. Earlier in the week, the U.S. indexes
soared as investors interpreted the Federal Reserve's decision to
begin tapering bond purchases in January as confidence in the
underlying strength of the economy.
* The buzz: Shawn Langlois writes that the end-of-week hiccup
arrives in the form of quadruple witching, the last trading day for
various options and futures. "So, we might see a pickup in volume
and volatility for what would otherwise be a sleepy time of year.
We'll also get the added bonus of S&P 500 rebalancing, which
includes Facebook officially joining the index."
* The comment: "If there are any doubts that the Fed made the
right decision on Wednesday to begin tapering, let them be laid to
rest. The final reading for third quarter U.S. GDP came in much
better than expected at 4.1% growth, revised up from 3.6%," Douglas
Coté, chief market strategist at ING U.S. Investment Management,
wrote in a note. "While the Fed was correct to hand the baton over
to the market, it will not be without consequence. The Fed has been
managing market volatility, so anticipate an increase to more
normal levels. However, the economy is strong enough to stand on
its own two feet, and we are winding down 2013 in better shape than
when we began," he added.
In corporate news, several companies reported quarterly results
before the markets open.
* BlackBerry shares initially dropped after the company reported
a bigger a third-quarter loss than expected. However, shares
rallied 12.3% as the firm also announced it had entered into a
five-year strategic partnership with Foxconn to make phones for
Indonesia and other fast-growing markets.
* Walgreen Co. shares fell initially but rebounded and are up
2%, after the drugstore chain's fiscal first-quarter profit met
estimates. Earnings rose to $695 million, or 72 cents a share, from
$413 million, or 43 cents a share, a year earlier. Chief Executive
Greg Wasson said margins were affected by generics.
* Shares of CarMax Inc. fell 8.4% after the used-car seller's
third-quarter profit missed Wall Street's expectations. Profits
rose to $106.5 million, or 47 cents a share, from $94.7 million, or
41 cents a share, in the year-ago period. Revenue rose to $2.9
billion from $2.6 billion.
* Red Hat Inc. surged 19.1% after the software firm on late
Thursday said fiscal third-quarter profit rose 50%.
* Shares of Carnival Corp. gained 1.5%, adding to gains from
Thursday when the cruise-line operator reported fourth-quarter
earnings.
In other financial markets
* Chinese stocks closed at 17-week low, while the rest of Asia
was mixed and European stock markets scored the best week since
April.
* Gold rebounded from the previous session's losses and
reclaimed $1,200-an-ounce level, while most metals prices rose. Oil
futures slipped and the dollar fell against most rivals.
More must-reads from MarketWatch:
Witchy volatility, BlackBerry reports and Facebook gets S&P
500'd
U.S. third-quarter growth raised to 4.1%
Lessons from 2013: Stick with your long-term ideas
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