Business

Stocks soar after a five-day slump

The Dow Jones industrial average rose 313.66, or 2 percent, to 15,973.84. The Standard & Poor’s 500 rose 35.70, or 2 percent, to 1,864.78. The Nasdaq composite rose 70.67, or 1.7 percent, to 4,337.51.
The Dow Jones industrial average rose 313.66, or 2 percent, to 15,973.84. The Standard & Poor’s 500 rose 35.70, or 2 percent, to 1,864.78. The Nasdaq composite rose 70.67, or 1.7 percent, to 4,337.51. Bloomberg

Stocks ended a down week on an up note Friday, snapping a five-day losing streak on the strength of energy and financial companies.

A sharp rebound in oil prices and an encouraging report on retail sales helped lift the stock market to its first gain since late last week.

Despite the rally, the major stock indexes ended the week down about 1 percent. They remain down more than 8 percent for the year.

“It’s a relief to see after several very ugly days in a row, but I wouldn’t hang my hat on it and say the worst is over,” said Rob Eschweiler, global investment specialist at J.P. Morgan.

The Dow Jones industrial average rose 313.66, or 2 percent, to 15,973.84. The Standard & Poor’s 500 rose 35.70, or 2 percent, to 1,864.78. The Nasdaq composite rose 70.67, or 1.7 percent, to 4,337.51.

Global stocks have been in a slump since the beginning of the year on concerns that growth in China, which has been the engine of the global economy in recent years, is slowing far faster than expected. Plunging oil prices and low inflation have added to the market’s jitters that the global economy is sputtering.

Those worries also helped drive the stock market lower in recent days and continued to batter stocks in Asia. Japan’s main stock index lost nearly 5 percent Friday. But the downbeat trend in the U.S. snapped as investors were encouraged by retail sales and a rally in European stocks.

A surge in oil prices helped put investors in a buying mood early on. A day after sinking to its lowest level since May 2003, benchmark U.S. crude climbed $3.23, or 12.3 percent, to $29.44 a barrel in New York.

The oil rebound sent the S&P 500’s energy companies 2.6 percent higher. Marathon Oil was the best performer in the sector, rising 48 cents, or 6.8 percent, to $7.49.

Financial shares led the market’s advance. The sector is the worst-performing part of the market this year because investors expect that low interest rates around the world will sap bank profits, but it rallied 4 percent Friday.

Traders also welcomed a report from the Commerce Department indicating a modest gain in retail sales last month. The data, which came in ahead of expectations, suggested that consumers kept shopping despite sharp drops in stock prices.

The positive sales report and recent job numbers showing a pickup in wage growth suggest the economy is holding up better than Wall Street thinks, Eschweiler said.

“It solidifies our view that the markets are pricing in a significantly higher probability of recession than what we think the fundamentals currently dictate,” he said.

Related stories from Kansas City Star

  Comments