By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks traded higher on Friday,
with the health-care sector leading S&P 500 gains and the Dow
industrials managing to stay above 16,000.
The S&P 500 index (SPX) gained 6 points, or 0.3%, to
1,801.81 in afternoon trade. Health care and industrials led
gainers among the S&P's 10 major sectors.
The Nasdaq Composite (RIXF) gained 18 points, or 0.5%, to
3,987.40.
The Dow Jones Industrial Average (DJI) gained 19 points, or
0.1%, to 16,028, a day after the blue-chip index closed above
16,000 for the first time.
U.S. stocks have had a record-breaking rally this year, buoyed
by the improving economy, low inflation and the Federal Reserve's
accommodative monetary policy. The Fed has vowed to keep interest
rates low for an extended period and has also been pumping $85
billion a month into the economy via its bond-buying program.
Janet Yellen, nominated to succeed Ben Bernanke as head of the
Fed early next year, is expected to continue the central bank's
efforts to boost the economy and lower unemployment.
As a result, the S&P 500 has gained 26% this year and has
soared around 166% from its bear-market low of 676.53 hit in 2009.
The Dow closed above 16,000 on Thursday, notching its 40th record
close this year. It took the 30-stock index 139 trading days to
climb 1,000 points from its first close at the 15,000 level on May
7, making it the 6th fastest 1,000-point gain for the Dow.
"We've set a new record close on the Dow. We're doing it in a
fashion that's not an explosion; it's kind of a grind," said Art
Hogan, market strategist at Lazard Capital Markets.
The market's gains have been underpinned by the belief that
third-quarter earnings were better than expected, the global
economy is getting better and the Federal Reserve will keep its
accommodative monetary policy, according to Hogan. "That doesn't
mean they won't taper [bond buying], but they won't raise interest
rates any time soon," he said, referring to the Fed.
Investors got several encouraging economic reports this week,
including a sharp drop in weekly jobless claims, a 0.4% rise in
October retail sales and a 0.1% decline in October consumer
prices.
Wall Street's strong run has spurred discussion of whether a
bubble is forming in the market. Hogan said the S&P 500 is not
in bubble territory based on stock valuations.
"I don't think we are overvalued [overall], but you can find
pockets of a bubble" in equity sectors such as social media, cloud
computing and biotechnology, he said.
Billionaire David Tepper, who runs hedge fund Appaloosa
Management LP, also believes there is no bubble in the stock
market, telling Bloomberg TV that major economies such as China and
the U.S. are on "firm ground." Read: 10 views on asset bubbles.
"Our big play versus the market is airlines. We're the biggest
holder of all these different airlines," Tepper also said. Shares
of United Continental Holdings (UAL) rose 3% and the NYSE Arca
Airline index gained 1.1%.
Boeing Co. (BA) was the top gainer in the Dow, with its shares
up 1.5%. Nike Inc. (NKE) shares gained 0.4% after the company
raised its quarterly dividend by 14%.
Intel Corp. was the Dow's biggest decliner. Shares of Intel
(INTC) declined 5.2% after the chip maker said its revenue and
operating profit will be flat in 2014 due to the slump in its PC
business.
Biogen Idec Inc. (BIIB) was the top gainer in the S&P 500.
Its shares rallied 12% after the biotech company said Friday that
the European Medicines Agency has determined that dimethyl fumarate
in its multiple-sclerosis treatment Tecfidera qualifies as a new
active substance. This designation will provide 10 years of
regulatory exclusivity for the treatment in the European Union.
Ross Stores Inc. (ROST) was the top decliner in the S&P 500,
with its shares down 6%. The discount retailer said late Thursday
its fiscal third-quarter profit rose 7.6%, but its forecast for the
current quarter was below market expectations.
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