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Wednesday, 22 December, 1999, 21:01 GMT
Shares, US economy smash records

holiday shopping Christmas stocks are bringing cheer

The US economy surged ahead in the third quarter of 1999 as stocks moved to record levels.

The longest boom in US history shows no sign of slowing down.

The bright economic outlook gave fresh impetus to stock markets when they opened on Wednesday, the day after America's Nasdaq share index posted its largest ever one day gain.

The Nasdaq, mostly made up of technology or internet firms, set its 57th record high of 1999 on Wednesday, reaching 3936, up 78% for the year.

That follows a record rise on Tuesday, when the index soared 127.28 points (3.4%) in a single day, its best one-day performance ever.

Enthusiasm for internet and technology firms were also boosting European stock markets to record levels on Wednesday.

It's beyond what anyone could think possible. You gotta enjoy it while it lasts
Scott Bleier

Huge rise for US economy

Meanwhile, new figures showed that the US economy was growing even faster than previously thought.

The economy grew by 5.7% annually in the third quarter of the year, revised upwards from the previous figure of 5.5%.

After eight years of expansion, the US boom shows no signs of slowing down.

But, surprisingly, the US economy is showing little sign of inflation either, with the year-on-year price deflator, the broadest measure of inflation, rising by only 1.1%.

Worries about the boom, and the expectation that the US central bank may be forced to raise interest rates in the New Year, may well cool the stock market surge.

But not at the moment.

Stock boom

Since the end of October the Nasdaq index has risen more than 25% as a relentless flow of funds has puffed up the share prices of US technology companies.

Its rise had a knock-on effect on tech firms in Asia and Europe.

In Japan tech stocks such as Sony and Softbank helped the Nikkei share index close 2.1% higher.

The rest of the US stock market has only modestly shared in the boom, with the broader S&P 500 index up only 15% for the year.

"Wild end of the blow-out"

In France the Cac-40 index, which reflects the value of the largest firms listed in Paris, was up 1.66% to a record 5,657.2 on Wednesday. It began the year at 3,942.6.

Frankfurt's benchmark Xetra Dax index was also setting records with a rise of 109 points to 6,492.53. It started the year at 5,006.

Fed chief Alan Greenspan Fed chief Alan Greenspan: festive cheer
In London the FTSE 100 index closed 21.1 points higher at 6,728.6 just below its record close.

A raft of internet and technology firms, from Telewest to Psion, led the list of high climbers.

The impetus for the latest phase of rising prices was the decision by the US central bank, the Federal Reserve, not to raise interest rates.

Although that decision was expected - because of concerns about the millennium bug - the markets took delight in hints that rates may not necessarily rise in February.

Some analysts believe that this was just the excuse the Nasdaq needed at a time of the year when they traditionally rise.

"This is the wild end of the blowout, with everything be damned and going full steam ahead," said Scott Bleier, chief investment strategist at Prime Charter.

"These gains are astronomical. These are multi-year moves in a few hours and each huge move adds lots of points to the major index," he added.

"It's beyond what anyone could think possible. You gotta enjoy it while it lasts."

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See also:
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