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Dow Closes Above 18,000 for First Time on Upbeat GDP Report

The Dow Jones Industrial Average closed above 18,000 for the first time Tuesday. CARLO ALLEGRI / Reuters

The Dow Jones Industrial Average closed above 18,000 for the first time on Tuesday, capping a run that saw the index tack on 1,000 points in only six months. It was the fifth straight session of gains for the Dow, handing investors a merry Christmas as 2014 draws to a close.

Optimism about the U.S. economy spurred investors after the government upgraded economic growth to the fastest pace in 11 years. "Our economy is firing on most cylinders, whereas the global economy is essentially in dire need of a spark," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania. The Commerce Department said the economy expanded at an upwardly revised 5.0 percent rate in the third quarter, driven by lower fuel prices, rising consumer confidence and an improving job market.

The Federal Reserve also helped lift investors' spirits after saying last week that it would be "patient" about ratcheting up borrowing costs.

U.S. Economy Grows at Fastest Pace in 11 Years 1:55

The Dow unofficially closed at 18024.11, up 64.67 or 0.36 percent. The benchmark S&P 500 also rose, gaining 0.17 percent to 2082.17 for its 51st record close of the year. The tech-heavy Nasdaq slide, however, slid 0.33 percent to 4765.42.

Trading has been thin ahead of the holiday weekend, however. The markets will have a shortened session on Wednesday, Christmas Eve, and will be closed Thursday, Christmas Day.

"Our economy is firing on most cylinders, whereas the global economy is essentially in dire need of a spark."

The market's rise has been good news for Americans who own shares, including the wealthy, corporations, financial firms and workers with retirement funds and pensions invested in stocks. For those who don't dabble in stocks, it could mean a widening wealth gap, however.

What's next?

The question is "Now what?" as we head into 2015.

Many market pros, particularly those in the trading pits, dismiss round numbers as something only journalists and novices notice.

Still, there's something to be said for a big, black headline that indicates the market has crossed another bridge.

"It gives people who have been out of the market since 2009 or have only dabbled around the edges just another reminder that they're missing something," said John Canally, chief economic strategist at LPL Financial. "Each time you get a round number it gets a lot of play in the financial media, and regular water coolers."

That kind of attention can bring at least a short burst of positive momentum.

"It's more psychological than anything else, especially for retail investors," said Jeff Carbone, founder and senior partner for Cornerstone Financial Partners.