NEW YORK (MarketWatch) — U.S. stocks rose on Friday, with the S&P 500 index closing above 1,800 for the first time and extending gains into a seventh consecutive week.
The Dow Jones Industrial Average also notched a record close above 16,000.
The S&P 500 (SPX) climbed 8.91 points, or 0.5%, to close at 1,804.76, notching a gain of 0.4% for the week. Health care and industrials led gainers among the S&P's 10 major sectors.Click to Play Pandora, Intel are stocks to watch
Barron's columnist Brendan Conway outlines key stocks to watch on Friday, including Pandora and Intel. Photo: Getty Images
The Nasdaq Composite (COMP) rose 22.49 points, or 0.6%, to 3,991.65, posting a gain of 0.1% for the week.
The Dow (DJIA) gained 54.78 points, or 0.3%, to end at 16,064.77, leaving it up 0.7% for the week. On Thursday, the blue-chip index closed above 16,000 for the first time.
U.S. stocks have had a record-breaking rally this year, buoyed by the improving economy, low inflation and the Federal Reserve's accommodative monetary policy. The Fed has vowed to keep interest rates low for an extended period and has also been pumping $85 billion a month into the economy via its bond-buying program.
Janet Yellen, nominated to succeed Ben Bernanke as head of the Fed early next year, is expected to continue the central bank's efforts to boost the economy and lower unemployment.Bloomberg Enlarge Image Intel is Dow's biggest decliner after chip maker says revenue will be flat in 2014.
As a result, the S&P 500 has gained nearly 27% this year and has soared around 166% from its bear-market low of 676.53 hit in 2009. The Dow closed above 16,000 on Thursday, notching its 40th record close this year. It took the 30-stock index 139 trading days to climb 1,000 points from its first close at the 15,000 level on May 7, making it the sixth fastest 1,000-point gain for the Dow.• Markets Stream: Follow continuous coverage of the markets /conga/story/misc/markets_stream.html 267565
"We've set a new record close on the Dow. We're doing it in a fashion that's not an explosion; it's kind of a grind," said Art Hogan, market strategist at Lazard Capital Markets.
The market's gains have been underpinned by the belief that third-quarter earnings were better than expected, the global economy is getting better and the Federal Reserve will keep its accommodative monetary policy, according to Hogan. "That doesn't mean they won't taper [bond buying], but they won't raise interest rates any time soon," he said, referring to the Fed.
Investors got several encouraging economic reports this week, including a sharp drop in weekly jobless claims, a 0.4% rise in October retail sales and a 0.1% decline in October consumer prices.
Wall Street's strong run has spurred discussion of whether a bubble is forming in the market. Hogan said the S&P 500 is not in bubble territory based on stock valuations.
"I don't think we are overvalued [overall], but you can find pockets of a bubble" in equity sectors such as social media, cloud computing and biotechnology, he said.
Billionaire David Tepper, who runs hedge fund Appaloosa Management LP, also believes there is no bubble in the stock market, telling Bloomberg TV that major economies such as China and the U.S. are on "firm ground." Read: 10 views on asset bubbles.
"Our big play versus the market is airlines. We're the biggest holder of all these different airlines," Tepper also said. Shares of United Continental Holdings (UAL) rose nearly 4% and the NYSE Arca Airline index (XX:XAL) gained nearly 2%.
Boeing Co. (BA) was the top gainer in the Dow, with its shares up 2.3%. Nike Inc. (NKE) shares gained 1% after the company raised its quarterly dividend by 14%.
Intel Corp. was the Dow's biggest decliner. Shares of Intel (INTC) fell 5.4% after the chip maker said its revenue and operating profit will be flat in 2014 due to the slump in its PC business.
Biogen Idec Inc. (BIIB) was the top gainer in the S&P 500. Its shares rallied 13% after the biotech company said Friday that the European Medicines Agency has determined that dimethyl fumarate in its multiple-sclerosis treatment Tecfidera qualifies as a new active substance. This designation will provide 10 years of regulatory exclusivity for the treatment in the European Union.
Ross Stores Inc. (ROST) was the top decliner in the S&P 500, with its shares down 5.7%. The discount retailer said late Thursday its fiscal third-quarter profit rose 7.6%, but its forecast for the current quarter was below market expectations.