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US stocks soar to new record as economic growth accelerates to ‘mind-blowing’ level

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The Dow stock index climbed above 18,000 for the first time ever Tuesday after government data estimated third-quarter US economic growth at a spectacular five percent.

The blue-chip index crossed its latest threshold within moments of the market opening, continuing a so-called “Santa Claus rally” that began after last week’s US Federal Reserve meeting.

By 1615 GMT, the Dow Jones Industrial Average stood at 18,040.32, up 80.88 points (0.45 percent).

The broad-based S&P 500 gained 4.21 (0.20 percent) to 2,082.75, while the tech-rich Nasdaq Composite Index dropped 10.37 (0.22 percent) to 4,771.06.

At five percent, US growth for the third quarter was the best since 2003. The figure, described as “mind-blowing” by one analyst, was also better than the 3.9 percent previously estimated by the government and the 4.3 percent projected by analysts.

Spending for consumption rose 3.2 percent, the biggest jump since the end of 2013. Analysts also cited strong growth in defense spending and exports.

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The US growth figures showed “an economy firing on all cylinders for the first time in many quarters,” said Chris Low, chief economist at FTN Financial.

However, the good cheer was offset somewhat by US durable goods orders — an indicator of business investment — which fell 0.7 percent in November.

Low said the durable goods orders implies that fourth-quarter capital spending will decline, perhaps sharply, “suggesting blockbuster growth in the third quarter will be followed by a distinctly slower Q4.”

– Potential 2015 headwinds –

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The Dow was on track Tuesday to close at a fresh record for the 36th time in 2014, according to S&P Dow Jones Indices.

The latest spate of equity records follow Wednesday’s Fed meeting, at which the US central bank kept interest rates low, gave a fairly upbeat assessment of the economy and said it would be “patient” before raising rates.

US stocks could climb higher still in the coming days as money managers who are under-invested in equities look to capitalize on the positive sentiment, said Mace Blicksilver, director of Marblehead Asset Management.

He also cited a paucity of sellers given the holiday shopping season.

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“I don’t see anything to change the momentum of the market between now and year end,” Blicksilver said.

The outstanding US growth figures comes on the heels of strong US labor and retail sales reports for November.

The latest US data bolsters the sense of advantage for the giant economy as Europe and Japan struggle to attain growth and growth slows in China and other emerging powers.

Adding to the momentum in the US has been a precipitous fall in gasoline prices, seen as a de facto tax cut for consumers.

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US gasoline prices are now $2.38 for a gallon of regulator, off about 27 percent from the year-ago level.

However, analysts cite some headwinds for the US economy heading into 2015, including a hit if major its trading partners continue to stagnate and the dollar remains strong.

Other unknowns relate to the implications of a crashing Russian ruble and of a huge drop in oil prices that weighs on US energy investment and the economic prospects of oil-exporting nations.

Most of all, market watchers say US stocks could stumble once the US Fed finally does begin to raise interest rates, as it is expected to do in the middle of 2015.

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2020 Election

WATCH: Katie Porter explains to constituents why her conscience demands support for Trump impeachment inquiry

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Congresswoman Katie Porter, in a video posted on social media Monday night, shared with residents of her purple California district why she is joining dozens of other Democrats who support launching an impeachment inquiry against President Donald Trump.

"I didn't come to Congress to impeach the president," said the first-term representative. "But when faced with a crisis of this magnitude, I cannot with a clean conscience ignore my duty to defend the Constitution. I can't claim to be committed to rooting out corruption and putting people over politics and then not apply those same principles and standards in all of the work I do."

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There is growing concern that China is trying to use universities to silence its critics in the West

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This is an important year in Chinese history. It marks the anniversaries of two political movements involving students and scholars: the May Fourth Movement and the Tiananmen Square protests – known in China as the June Fourth Incident.

The May Fourth Movement of 1919 challenged traditional Chinese values and authorities and demanded freedom of speech and democracy. Seventy years later – and 40 years after the Chinese Communist Party (CCP) had taken power – students, scholars, and other citizens mobilised again in defence of freedom of speech, human rights, and democratic values. But on June 4 1989, the CCP brutally crushed their movement. The crackdown created a legacy of heavily censored wrongs that cannot be righted while the current system lasts.

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A massive power outage like Argentina’s could happen in the US

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Argentina and Uruguay are recovering from nationwide power blackouts that cut electricity to tens of millions of people, including some in Paraguay, Chile and Brazil. The blackout’s cause is under investigation, but something similar could happen in the U.S. – and has.

On Aug. 14, 2003, a software bug contributed to a blackout that left 50 million people across nine U.S. northeastern states and a Canadian province without power. The outage lasted for as long as four days, with rolling blackouts in some areas for days after that.

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