Wall Street surges at end of aw­ful Jan­uary

The Pak Banker - - MARKETS/SPORTS -

Wall Street surged over 2 per­cent af­ter the Bank of Ja­pan un­ex­pect­edly cut in­ter­est rates and Mi­crosoft led a ma­jor rally in tech­nol­ogy shares, re­pair­ing some of the dam­age to the S&P 500's worst Jan­uary since 2009. Slammed by col­laps­ing oil prices that have fed doubts about the health of the global econ­omy, stocks have had a volatile start to the year. At one point last week, the S&P's loss for 2016 reached 11 per­cent be­fore re­cov­er­ing to end the month down 5 per­cent.

The in­dex rose 2.48 per­cent on Fri­day, its strong­est day since Septem­ber. "Sen­ti­ment cer­tainly had swung to a wildly neg­a­tive sce­nario. In the short term, I'm not sure the sen­ti­ment back­drop we've seen was war­ranted," said Michael Church, pres­i­dent of Ad­di­son Cap­i­tal Man­age­ment in Philadel­phia.

"What hap­pens if there is not a re­ces­sion? What hap­pens if China sta­bi­lizes and the Fed doesn't raise rates ag­gres­sively?" Global eq­ui­ties got a sur­prise boost on Fri­day af­ter Ja­pan's cen­tral bank cut a bench­mark rate below zero to stim­u­late its econ­omy. Stocks were also lifted by weak fourth-quar­ter U.S. gross do­mes­tic prod­uct growth data, which bol­stered ar­gu­ments that the Fed­eral Re­serve might go slower than ex­pected on fu­ture rate hikes.

While the Fed has not ruled out a rate hike in March, many in­vestors be­lieve re­cent global eco­nomic and fi­nan­cial tur­moil may lead it to wait.

Mi­crosoft shares jumped 5.83 per­cent on bet­ter-than-ex­pected re­sults. The soft­ware com­pany was the big­gest in­flu­ence on the S&P 500 and the Nas­daq and helped push the S&P tech sec­tor up 3.6 per­cent, its strong­est ses­sion since Au­gust. Fourth-quar­ter cor­po­rate re­port­ing sea­son is well un­der way, with S&P 500 com­pa­nies on av­er­age ex­pected to post a 4.1 per­cent drop in earn­ings, ac­cord­ing to Thom­son Reuters I/B/E/S. Ex­clud­ing en­ergy com­pa­nies, earn­ings are seen ris­ing 2.1 per­cent.

The Dow Jones in­dus­trial av­er­age .DJI ended 2.47 per­cent higher at 16,466.30 while the S&P 500 .SPX gained 46.88 points or 2.48 per­cent higher to end at 1,940.24.

The Nas­daq Com­pos­ite .IXIC surged 2.38 per­cent to 4,613.95. For the week, the Dow gained 2.3 per­cent, the S&P added 1.7 per­cent and the Nas­daq in­creased 0.5 per­cent.

That left the Dow down 5.5 per­cent for the month and the Nas­daq 7.9 per­cent lower, its largest monthly loss since May 2010. In Fri­day's trad­ing, Ama­zon slumped 7.61 per­cent af­ter its quar­terly profit missed ex­pec­ta­tions. Xerox gained 5.63 per­cent af­ter an­nounc­ing a deal with Carl Ic­ahn to split it­self into two. US crude oil CLc1 rose 1.4 per­cent af­ter trim­ming early gains on a re­port that Iran would not par­tic­i­pate in a pos­si­ble deal be­tween OPEC and other pro­duc­ing coun­tries to re­duce out­put.

Ad­vanc­ing is­sues out­num­bered de­clin­ers on the NYSE by 2,789 to 339. On the Nas­daq, 2,290 is­sues rose and 584 fell. The S&P 500 in­dex showed 16 new 52-week highs and seven new lows, while the Nas­daq recorded 28 new highs and 100 new lows. About 10.0 bil­lion shares changed hands on U.S. ex­changes, above the 8.3 bil­lion daily av­er­age for the past 20 trad­ing days, ac­cord­ing to Thom­son Reuters data.

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