Stocks Rally To Close Higher For Fourth Straight Week - U.S. Commentary

(RTTNews) - After moving sharply higher early in the session, stocks continued to perform well throughout the trading day on Friday. With the rally on the day, the major averages ended the session at their best closing levels in two months.

The major averages saw further upside going into the close, with the Nasdaq and the S&P 500 reaching new highs for the session. The Dow surged up 218.18 points or 1.3 percent to 17,213.31, the Nasdaq soared 86.31 points or 1.9 percent to 4,748.47 and the S&P 500 spiked 32.62 points or 1.6 percent to 2,022.19.

The gains on the day helped the major averages close higher for the fourth consecutive week. While the Nasdaq advanced by 0.7 percent, the Dow and the S&P 500 jumped by 1.2 percent and 1.1 percent, respectively.

The initial strength on Wall Street came on the heels of a rally by European stocks, which led to a 2.6 percent jump by the European STOXX 600 Index.

European stocks showed a substantial rebound on the day after pulling back sharply over the course of the previous session.

Analysts attributed the rebound by European stocks to renewed optimism about the European Central Bank's new stimulus measures announced on Thursday.

While traders soured on the stimulus as the previous session progressed, they appeared to once again rethink their stance on the issue.

An increase by the price of crude oil also generated buying interest, with crude for April delivery climbing $0.66 to $38.50 a barrel.

The price of crude oil reached a three-month closing high, benefiting from an optimistic report from the International Energy Agency.

In its monthly report, the IEA said the price of oil may have bottomed due to lower output from the U.S. and other non-OPEC producers.

Among individual stocks, shares of Finisar (FNSR) moved sharply higher after the fiber optic component supplier reported better than expected third quarter earnings and provided upbeat guidance.

Restaurant chain Bojangles (BOJA) also posted a standout gain after reporting fourth quarter results that exceeded analyst estimates.

On the other hand, shares of Zumiez (ZUMZ) came under pressure after the action sports apparel retailer reported better than expected fourth quarter results but provided disappointing guidance.

Sector News

Reflecting the increase by the price of crude oil, energy stocks turned in some of the market's best performances on the day.

While the NYSE Arca Oil & Gas Index jumped by 3 percent, the NYSE Arca Natural Gas Index surged up by 3.4 percent and the Philadelphia Oil Service Index soared by 4.4 percent.

Brokerage stocks also saw substantial strength, resulting in a 3.4 percent gain by the NYSE Arca Broker/Dealer Index. With the gain, the index reached its best closing level in two months.

Significant strength was also visible among biotechnology stocks, as reflected by the 2.8 percent gain posted by the NYSE Arca Biotechnology Index. The gain by the index came after it closed lower in the three previous sessions.

Banking, transportation, networking, and housing stocks also saw considerable strength, while gold stocks were among the few groups to buck the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Friday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index surged up by 1.1 percent.

As mentioned above, the major European markets saw substantial strength on the day. While the U.K.'s FTSE 100 Index jumped by 1.7 percent, the French CAC 40 Index and the German DAX Index soared by 3.3 percent and 3.5 percent, respectively.

In the bond market, treasuries extended a recent downtrend amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 4.8 basis points to 1.977 percent.

Looking Ahead

The Federal Reserve's monetary policy meeting is likely to be in focus next week, with the central bank due to announce its latest decision on Wednesday.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the wording of the accompanying statement.

A slew of economic data is also scheduled to be released next week, including reports on retail sales, industrial production, and producer and consumer price inflation.