The Dow Jones industrial average rose above 18,000 for the first time as faster-than-forecast growth in gross domestic product boosted confidence in the economy and overshadowed declines in health care companies.
The Dow average added 64.73 points, or 0.4 percent, to a record 18,024.17. The Standard & Poor’s 500 Index rose 0.2 percent to 2,082.17, also reaching an all-time high. Both gauges have advanced five straight days. The Nasdaq Biotechnology Index slipped 4.6 percent for the biggest decline since April.
“The market was roaring yesterday, and going into the end of the year it keeps pushing higher,” said Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP. “The Fed is part of the fueling of everything, and you have to couple that with the year-end push.”
It’s been 172 days since the Dow closed above 17,000 on July 3. That’s the fifth-fastest trip between thousands, with the record being 35 days to 11,000 in May 1999. It took the index almost 5,200 days to go from 1,000 to 2,000 between 1972 and 1987, according to Howard Silverblatt, an index analyst at the New York-based S&P Dow Jones Indices.
The Dow closed at an eight-month low on Oct. 16 before rallying more than 1,882 points, or 12 percent, to top 18,000.
The gauge has risen 175 percent during the five-year bull market that began in March 2009, propelled by better-than-estimated corporate results and three rounds of Fed bond purchases. The S&P 500 has more than tripled in that time.
Technology companies have had some of the biggest gains in the Dow this year, with Intel Corp. rising more than 44 percent and Microsoft Corp. jumping 29 percent. Consumer companies such as Home Depot Inc., Walt Disney Co. and Nike Inc. have also risen at least 22 percent to lead the 30-stock gauge’s advance.
Nike, UnitedHealth Group Inc., Visa Inc., Home Depot and Intel have paced gains during the gauge’s run to 18,000 in the second half of the year, with each rallying more than 20 percent from July 3. Caterpillar Inc., IBM Corp. and Chevron Corp. have been the worst performers, with slumps of more than 14 percent in that period.
The industrial gauge has climbed 8.7 percent this year, almost three times more than the Russell 2000 Index of small-cap companies.
“I think it’s a testament to where the economy is,” said John Canally, a Boston-based economic strategist at LPL Financial Corp., which oversees $464.8 billion. “The underlying trend in the economy is still there, we’re still in the middle of the business cycle and earnings look solid. That’s adding up to a lot of people saying ‘Hey, I’m missing this, I better get involved in the stock market.’ ”
Equity benchmarks have rallied to records, with the S&P 500 rebounding 12 percent from a low in October, amid speculation the U.S. economy is strong enough to withstand a slowdown overseas.
Data on Tuesday showed the world’s largest economy expanded at the fastest pace in more than a decade, as U.S. consumers and businesses spent more than previously estimated.
Gross domestic product grew at a 5 percent annual rate from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9 percent, revised figures from the Commerce Department showed.
Consumer spending rose more than forecast in November as incomes increased and gasoline prices dropped, indicating the biggest part of the U.S. economy is strengthening as the year ends.
Stocks started to rally last week, with the S&P soaring the most in four days since 2011, after the Fed said it will be patient on the timing of a rate increase even as U.S. growth shows signs of accelerating. Chairwoman Janet Yellen said any spillover from the situation in Russia is likely to be small, while the central bank didn’t mention turmoil sparked by tumbling oil prices.
The S&P 500 is now up 0.7 percent for December and 13 percent this year.
“Part of the rebound we’re now witnessing has to do with the realization that the selloff was overdone,” said David Wartenweiler, chief investment officer at Habib Bank AG in Zurich. “The U.S. economy is really on track to continue to grow at a healthy pace. It’s also important that the Fed said they’re going to increase interest rates but be patient.”
Nine out of 10 industries in the S&P 500 rose Tuesday, with health care companies posting the only losses as a group, tumbling 2.2 percent.
The Nasdaq Biotechnology Index fell for a second day, with losses beginning after a drug-benefit manager blocked Gilead Sciences Inc.’s $1,000 hepatitis treatment.
Gilead dropped 3.7 percent, after tumbling 14 percent Monday. Biogen Idec Inc. lost 4.7 percent and Celgene Corp. slipped 6.5 percent.