Santa brings all-time high

December 23, 2014 03:09 AM

U.S. stock-index futures rose, after the biggest four-day rally in three years sent equity benchmarks to a record, as data showed the world’s largest economy surged in the third quarter.

Standard & Poor’s 500 Index contracts expiring in March (CME:ESH15) rose 0.5% to 2,083.30 at 9:04 a.m. in New York. Dow Jones Industrial Average futures added 87 points today, or 0.5%, to 17,984.

“The market was roaring yesterday, and going into the end of the year it keeps pushing higher,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “These numbers are adding fuel to the fire. The Fed is part of the fueling of everything, and you have to couple that with the year-end push.”

The S&P 500 soared 5.4% over four days after the Federal Reserve’s pledge to be patient on the timing of interest-rate increases helped stocks recover from a plunge earlier this month.

Stocks climbed back to record levels after a slide in oil prices and a worsening of the financial crisis in Russia rippled through financial markets earlier this month, wiping more than $1 trillion from U.S. equity values in less than two weeks. The S&P 500 lost 5% in the seven trading days through Dec. 16.

Yesterday’s gains in the S&P 500 completed the fifth recovery this year from a decline of 4% or more, only 17 days after it started. In comparable drops beginning in January, April, July and September, the benchmark gauge needed about a month to erase losses, data compiled by Bloomberg show.

‘On Track’

The S&P 500 is now up 0.5% for December and 12% this year. The Dow is only 0.2% away from the 18,000 milestone.

“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.”

Data today 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% annual rate from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9%, revised figures from the Commerce Department showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg projected a 4.3% increase.

A separate report showed orders for U.S. durable goods unexpectedly declined in November as corporate investment stagnated and demand weakened for military equipment.

Reports later today may show personal spending increased last month, and a final reading of the Thomson Reuters/University of Michigan index of consumer sentiment for December will confirm a gain, economists forecast.