By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rallied Friday, with the
Dow Jones Industrial Average on track for its best weekly gain
since January, after a government report showed the economy grew at
its fastest pace in two years last quarter.
The U.S. economy expanded at an annual rate of 4.1% in the third
quarter due to stronger consumer spending and business investment
than previously reported, according to newly revised data.
Investors greeted the upward revision to the gross domestic product
as a welcome backdrop for future earnings growth.
The Dow Jones Industrial Average (DJI) aimed for the third
record close in a row. The Dow rose 105 points, or 0.7%, to 16,283
and is poised for a 3.3% weekly gain. That would be its best week
since January 4.
The S&P 500 index (SPX) hit an intraday high and was on pace
for a record close. The benchmark rose 13.7 points, or 0.8%, to
1,823.32 and was set to record a 2.7% weekly gain after two
straight weeks of losses. The Nasdaq Composite (RIXF) rallied 51
points, or 1.3%, to 4,108.7.
S&P 500 home -builder stocks gained the most over the past
week. Industrials and materials sectors both added more than 3% in
the past five days.
"Now that all the distractions are behind us -- 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: MarketWatch's 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% after 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% 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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