FOX Business: Capitalism Lives Here
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The Dow hit 18,000 after the latest reading on the U.S. economy put growth at an 11-year high.
The Dow registered a new milestone by trading above 18,000 points for the first time in history. It was the blue-chip index’s 36th record close of the year, while the S&P set its 51st all-time high.
The Commerce Department said the U.S. economy grew at an annual pace of 5% in the third quarter, compared to a previous estimate of 3.9%. That follows a 4.6% increase in gross domestic product for the second quarter. Therefore, the economy has expanded at the strongest two-month pace since 2003.
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Traders also got a glimpse at consumer spending and the housing market. Personal spending in November rose a seasonally adjusted 0.6% versus the prior month, beating forecasts for a 0.5% increase. October spending growth was revised up to 0.3% from 0.2%.
Analysts have been closely watching consumer spending for signs that cheaper gasoline and improved sentiment are driving Americans to buy more goods and services. According to AAA, the national average for a gallon of gas is $2.37, down 44 cents in a month and 87 cents year-over-year.
Sales of new homes dropped 1.6% in November, falling to a seasonally adjusted annual rate of 438,000. Economists were looking for a sales pace of 460,000 homes. October new-home purchases were revised lower.
Earlier this month, U.S. equities succumbed to volatility due to a sharp global oil slump that pressured energy names. West Texas Intermediate crude oil, the U.S. benchmark, is trading near its lowest level in more than five years.
Meanwhile, global jitters were rekindled by growing struggles for Russia. Its currency, the ruble, fell to record lows against the U.S. dollar.
Wall Street turned the corner last week when the Federal Reserve offered a dovish take on interest rates. Policy makers said the central bank “can be patient” as it prepares a timeline for raising interest rates, which have been held near zero since December 2008. Stocks subsequently pushed higher, marking their biggest two-day run since 2011.
On Tuesday, the benchmark 10-year Treasury yield jumped to 2.26% from 2.16%, reflecting a decrease in prices.
WTI oil futures joined the Wall Street party, settling $1.86 higher, or 3.4%, at $57.12 a barrel.
Elsewhere in commodities, wholesale New York Harbor gasoline increased more than three cents, or 2.3%, to $1.57 a gallon. Gold futures fell $1.80, or 0.2%, to $1,178 a troy ounce.
In corporate news, Keurig Green Mountain (GMCR) fell 2.3% after the company announced a recall of around seven million single-serve brewing machines. The recall applies to the Keurig K10 Mini Plus model.
Chesapeake Energy (CHK) said it will launch a $1 billion stock buyback following the sale of $5 billion worth of assets, sending shares 10% higher.