Trader Peter Tuchman wears a "Dow 18,000" cap as he works on the floor of the New York Stock Exchange in New York, December 23, 2014.CARLO ALLEGRI/Reuters
The Dow Jones industrial average is breaking through another milestone, closing above 18,000 points for the first time following more encouraging news on the U.S. economy.
The government reported early Tuesday that the economy grew at a rapid annual rate of 5 per cent in the third quarter of the year, the fastest pace in more than a decade.
It was the fifth straight gain as the market shakes off the last of an early-December slump. The Dow and the Standard & Poor's 500 index are at all-time highs.
The Dow rose 64 points, or 0.4 per cent, to 18,024.
The S&P 500 rose three points, or 0.2 per cent, to 2,082.
The Nasdaq composite fell 16 points, or 0.3 per cent, to 4,765.
Energy stocks rose as the price of oil turned higher.
In Toronto, the S&P/TSX composite index soared 161.65 points, or 1.12 per cent, to 14,594.03. The Canadian dollar climbed 0.05 of a cent to 85.98 cents (U.S.).
Statistics Canada says gross domestic product rose by 0.3 per cent in October, beating economists' expectations of 0.1 per cent. The growth was broad based and due largely to oil and gas extraction, mining and manufacturing.
The final estimate for third-quarter U.S. economic growth was revised up to a 5 per cent annual pace, its quickest in 11 years and easily topping expectations for growth of 4.3 percent.
"Everyone is surprised, and I'm definitely pleased," said Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York. "But the question is, how can inflation be so low when GDP is so high? Either this is just a one-off and GDP will fall back dramatically, or we'll see a pickup in inflation, which could put more pressure on the Fed."
The report spurred a broad rally, with nine of the ten primary S&P 500 sectors higher on the day. The only group to fall was health-care, down 2.2 per cent alongside a massive drop in biotech stocks.
The Nasdaq biotech index fell 4.6 per cent, its biggest one-day decline since April 10. Components of the index made up the top six percentage decliners on the S&P; Celgene Corp fell 6.5 per cent to $106.12 while Biogen lost 4.7 percent to $335.76. Regeneron Pharmaceuticals fell 4.6 percent to $394.05.
Gilead Pharmaceuticals fell 3.7 per cent to $89.45, extending Monday's drop of 14 percent, which came after Express Scripts said it would abandon covering Gilead's hepatitis C treatment in favor of a cheaper option.
"This is just a knee-jerk reaction, based on a bear thesis that Express Scripts will start to dictate prices," said Kaufman. "I don't see how this is any different than any other company in another sector getting more competition. Soon people will go through the stocks one-by-one to see which got oversold."
Advancing issues outnumbered declining ones on the NYSE by 1,990 to 1,090, for a 1.83-to-1 ratio on the upside; on the Nasdaq, 1,399 issues rose and 1,353 fell for a 1.03-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 124 new 52-week highs and 5 new lows; the Nasdaq Composite was recording 182 new highs and 53 new lows.
About 5.41 billion shares traded on all U.S. platforms, according to BATS exchange data, compared with the month-to-date average of 7.78 billion.