Gross domestic product grew at an annual rate of 4.1 percent in the
third quarter, the fastest pace in almost two years, and exceeding
the 3.6 percent pace reported earlier this month. Business spending
was also stronger than previously estimated.
Until recently, investors have viewed positive data as a negative
because it suggested that the Federal Reserve would begin to trim
its stimulus program. The central bank had said it would start
tapering its monthly bond buying when certain economic indicators
met its targets.
The Fed, however, said on Wednesday that it would pare its
market-friendly monthly asset purchases by $10 billion to $75
billion, starting in January. It also suggested that its key
interest rate would stay at rock bottom longer than previously
promised.
"If tapering had not been announced, I don't think this news would
be as welcomed by the market as it is right now," said Nicholas
Colas, chief market strategist at the ConvergEx Group in New York.
"But now, there's no real risk that there will be more tapering any
time soon, and on top of that, growth is absolutely stronger than
many were expecting."
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Fed Chairman Ben Bernanke said that if U.S. job gains continue as
expected, then the bond purchases would be cut at a "measured" pace
through much of next year, and would probably be wound down "late in
the year, certainly not by the middle of the year."
The Dow Jones industrial average <.DJI> rose 42.06 points, or 0.26
percent, to end at 16,221.14. The Standard & Poor's 500 Index <.SPX>
gained 8.71 points, or 0.48 percent, to finish at 1,818.31. The
Nasdaq Composite Index <.IXIC> climbed 46.61 points, or 1.15
percent, to close at 4,104.74.
Both the Dow and the S&P 500 finished Friday's session at record
closing highs. This marked the Dow's third record closing high in a
row. Earlier in Friday's session, the Dow set an all-time intraday
high at 16,287.84.
For the week, the Dow rose 3 percent, its best week since September,
and the S&P 500 gained 2.4 percent, its best week since July. The
Nasdaq advanced 2.6 percent.
Indexes pared their gains going into the close because of "quadruple
witching," which marked the quarterly expiration and settlement of
December contracts for stock options, stock index options, stock
index futures and single stock futures. In addition, most U.S. index
funds adjusted their portfolios as a result of quarterly rebalancing
by index providers.
Massive volatility affected a number of notable names, including
FedEx Corp <FDX.N> and Electronics Arts Corp <EA.O>, in the final
minutes of trading.
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About 6.47 billion shares traded on all U.S. platforms, according to
BATS exchange data, a rate that was far higher than other sessions
this week.
The benchmark S&P 500 has soared more than 27 percent this year and
is on track for its best year since 1997. The Fed's aggressive
economic stimulus program has been the major catalyst for this
year's rally.
The stock of Red Hat Inc <RHT.N> jumped 14.5 percent to $56.10 and
was the S&P 500's best percentage gainer after the world's largest
commercial distributor of the Linux operating system reported
third-quarter results above analysts' estimates and raised its
full-year forecast.
Blackberry Ltd <BB.TO><BBRY.O> reported a massive quarterly loss on
Friday due to an inventory writedown and asset-impairment charges.
Still, BlackBerry's U.S.-listed shares shot up 15.5 percent to close
at $7.22.
Walgreen Co <WAG.N> climbed 3.7 percent to $59.04 after reporting
higher first-quarter sales.
Oracle Corp <ORCL.N> fell 0.6 percent to $36.37 after the No. 2
software maker it would buy Responsys Inc <MKTG.O> in a deal valued
at $1.5 billion. In contrast, Responsys shares surged 40.3 percent
to $27.40.
Jones Group Inc <JNY.N> shares shot up 5.2 percent to $14.87 after
the fashion company, whose brands include Nine West, Anne Klein and
Stuart Weitzman, said on Thursday that it had agreed to be bought by
Sycamore Partners for $1.2 billion.
About 73 percent of stocks traded on the New York Stock Exchange
closed higher for the day, while 70 percent of Nasdaq-listed shares
ended in positive territory.
(Editing by Bernadette Baum and Jan
Paschal)
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