U.S. Stocks Rise to Records as GDP Grows Faster Than Estimated

Bloomberg (21/12) -- U.S. stocks rose, sending the Standard & Poor’s 500 Index to its biggest weekly gain since July, as data showing faster-than-estimated growth boosted confidence in the world’s largest economy.

The S&P 500 added 0.5 percent to a record 1,819.46 at 4 p.m. in New York. The Dow Jones Industrial Average rose 60.75 points, or 0.4 percent, to 16,239.83, also an all-time high. The S&P 500 jumped 2.5 percent this week, halting a string of two weekly declines and erasing a loss for the month, after the Federal Reserve’s decision to slow the pace of its stimulus boosted investor confidence that the recovery in the world’s largest economy is on course. The Dow’s weekly advance of 3.1 percent was its biggest since Jan. 4. Data today showed the rate of expansion in the third quarter was faster than previously estimated as consumers stepped up spending on services such as health care and companies invested more in software. Gross domestic product climbed at a 4.1 percent annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, Commerce Department figures showed. The S&P 500 has rallied 28 percent so far in 2013, on course for its best performance since 1997. Three rounds of central-bank bond purchases have helped propel the equity benchmark 169 percent higher from a 12-year low in 2009. The Fed will probably reduce its bond purchases by $10 billion in each of its next seven meetings before ending the program in December 2014, according to the median forecast in a Bloomberg survey of 41 economists conducted on Dec. 19. Announced index changes, such as the addition of Facebook Inc.’s inclusion in the S&P 500, take effect after the markets’ close. Money managers will need to buy and sell about $13.8 billion of shares as they shuffle their funds to mimic changes in the S&P 500 quarterly rebalance, according to estimates from Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices in New York. He forecast utility companies will see the biggest increase in their representation while the weighting of consumer staples will drop the most.