Stocks Close Sharply Higher Amid Return Of Risk Appetite - U.S. Commentary

(RTTNews) - Stocks moved sharply higher during trading on Friday, reflecting a return of risk appetite following the recent weakness for the markets. With the gains, the major averages continued to regain ground after ending Wednesday's trading at their lowest closing levels in over a year.

The major averages ended the session firmly positive, at or near their best levels of the day. The Dow surged up 210.83 points or 1.3 percent to 16,093.51, the Nasdaq soared 119.12 points or 2.7 percent to 4,591.18 and the S&P 500 shot up 37.91 points or 2 percent to 1,906.90.

For the week, the major averages all moved to the upside, the Dow advanced by 0.7 percent, the S&P 500 climbed by 1.4 percent and the Nasdaq jumped by 2.3 percent.

Early buying interest was partly generated in reaction to strength in the overseas markets, as stocks around the world moved sharply higher.

Overseas stocks benefited from an increase in commodities prices as well as optimism about further stimulus from the European Central Bank.

ECB President Mario Draghi said yesterday the bank would review and possibly reconsider its monetary policy stance at the next meeting in early March.

The strength on Wall Street also came amid a notable increase by the price of crude oil, with crude for March delivery surging up $2.66 to $32.19 a barrel.

The price of crude added to the $1.18 a barrel increase seen in the previous session to climb back above the $30 a barrel level.

On the U.S. economic front, the National Association of Realtors released a report showing that existing home sales rebounded strongly in December after seeing a steep drop in the previous month.

NAR said existing home sales jumped 14.7 percent to an annual rate of 5.46 million in December from a rate of 4.76 million in November. Economists had expected sales to climb to a rate of 5.20 million.

A separate report from the Conference Board showed a modest decrease by its index of leading economic indicators in December.

Sector News

Benefiting from the increase by the price of crude oil, energy stocks saw substantial strength on the day, climbing further off their recent lows.

The NYSE Arca Natural Gas Index surged up by 5.8 percent, while the NYSE Arca Oil & Gas Index and the Philadelphia Oil Service Index jumped by 4.6 percent and 4.4 percent, respectively.

Telecom stocks also showed a significant move to the upside, driving the NYSE Arca Telecom Index up by 4.8 percent. With the gain, the index climbed further off the three-year closing low set on Wednesday.

Sprint (S) helped to lead the telecom sector higher, soaring by 14.8 percent after revealing it will release its third quarter results a week earlier than originally planned.

Electronic storage, software, brokerage, and housing stocks also turned in strong performances on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved notably higher during trading on Friday. Japan's Nikkei 225 Index soared by 5.9 percent, while Hong Kong's Hang Seng Index jumped by 2.9 percent.

The major European markets also showed substantial moves to the upside on the day. While the French CAC 40 Index surged up by 3.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index advanced by 2.2 percent and 2 percent, respectively.

In the bond market, treasuries moved lower on the day, extending the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 2.048 percent.

Looking Ahead

The Federal Reserve's monetary policy announcement is likely to attract attention next week, although the central bank is widely expected to leave interest rates unchanged.

Trading could also be impacted by reaction to reports on consumer confidence, new home sales, durable goods orders and pending home sales.

On the earnings front, Apple (AAPL), AT&T (T), Boeing (BA), DuPont (DD), Facebook (FB), Microsoft (MSFT), McDonald's (MCD), Johnson & Johnson (JNJ), Visa (V), and Xerox (XRX) are among the slew of companies due to report their quarterly results next week.