Stocks head higher on strong US economic growth

KEN SWEET AP Markets Writer Published:

NEW YORK (AP) -- Stocks rose in late morning trading Friday after the U.S. reported unexpectedly strong economic growth during the third quarter. The Dow Jones industrial average and the Standard & Poor's 500 index pushed further into record territory. The S&P 500 is up 27 percent so far this year. If the gains hold the market could have its biggest year since 1997.

KEEPING SCORE: The Dow was up 61 points, or 0.4 percent, to 16,244 as of 11:04 a.m. Eastern. The S&P 500 index rose 9 points, or 0.5 percent, to 1,818 and the Nasdaq composite added 28 points, or 0.7 percent, to 4,086.

GDP: The U.S. economy grew between July and September at the fastest pace since late 2011. The Commerce Department reported growth of 4.1 percent, much stronger than most economists expected, thanks in part to a pickup in consumer spending. It was the third and final revision from the government for the third quarter. More important still to investors will be what kind of growth occurred during the final quarter of the year, when Americans typically shift their spending into high gear. Many economists believe that growth in this quarter has slowed to as low as 2 percent.

STRONG WEEK: The Dow is up 3 percent this week alone and the S&P 500 and Nasdaq are up about 2 percent. Investors have applauded the Federal Reserve's decision to start gradually cutting back on its economic stimulus program in January as well as last several days of positive economic data.

'WITCHING' HOUR: Four times a year, four groups of stock options and futures contracts all expire on the same day. The event is called "quadruple witching" by Wall Street and the simultaneous expiration of these four contracts can cause stock trading volume to be higher than normal and volatility to increase, particularly near the end of the day. The fourth and final "quadruple witching" day of the year occurs on Friday.

RED HAT DANCE: The software company Red Hat jumped $9.42, or 19 percent, to $58.37. The open-source software developer reported an adjusted profit of 42 cents per share, well ahead of Wall Street estimates of earnings of 35 cents per share.