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Dow, S&P 500 hit new records on strong GDP growth

Traders work the floor of the New York Stock Exchange after the Dow Jones Industrial Average closed up 293 points on December 18, 2013
Traders work the floor of the New York Stock Exchange after the Dow Jones Industrial Average closed up 293 points on December 18, 2013

US stocks bolted to new records Friday after the Commerce Department reported that US economy grew much faster in the third quarter than previously estimated.

The Dow Jones Industrial Average advanced 42.06 points (0.26 percent) to finish at 16,221.14, a new record.

The broad-market S&P 500 rose 8.72 (0.48 percent) to 1,818.32, also a new record, while the tech-rich Nasdaq Composite Index added 46.61 (1.15 percent) at 4,104.74.

Analysts said investors were cheered after the Commerce Department raised its estimate for third-quarter gross domestic product growth to an annual rate of 4.1 percent, from 3.6 percent.

Scott Wren, senior equity analyst at Wells Fargo Advisors, said the GDP increase suggested solid economic growth, but not so strong as to undermine the Federal Reserve's strategy of keeping interest rates low and tapering its bond-purchase program.

"We're still in this modest-growth, modest-inflation economy," Wren said.

Technology companies had a good day, with solid gains at Twitter (+4.4 percent), Google (+1.3 percent), Amazon (+1.8 percent) and Dow component Microsoft (+1.5 percent). Nasdaq heavyweight Apple rose 0.8 percent.

Beleaguered smartphone maker BlackBerry surged 15.5 percent despite reporting a $4.4 billion loss on a large write-down. The Canadian company announced a five-year strategic partnership with Taiwan-based Foxconn that will initially focus on a smartphone for Indonesia.

Societe Generale said the BlackBerry news offered "glimmers of hope" despite the yawning loss.

Information technology giant Oracle fell 0.6 percent after announcing plans to acquire marketing software company Responsys for $27 per share, or about $1.5 billion. Responsys soared 40.3 percent to $27.40.

Red Hat, which provides open-source software, jumped 14.5 percent after earnings rose 50 percent to $52 million.

Dow component Nike fell 1.2 percent after fiscal second-quarter earnings rose 40 percent from a year ago to $537 million. Canaccord Genuity said the sports apparel manufacturer's results were "fine" but pointed to rising expenses and higher raw material costs as concerns.

Drugstore chain Walgreen advanced 3.7 percent after fiscal first-quarter earnings of 72 cents per share met expectations and revenues of $18.3 billion rose 6 percent compared with last year. Chief executive Greg Wasson said the company was "generally satisfied" with revenue growth "given the continued soft economy."

Bond prices rose. The yield on the 10-year US Treasury fell to 2.89 percent from 2.93 percent Thursday, while the 30-year fell to 3.82 percent from 3.90 percent. Bond prices and yields move inversely.

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