After trending lower in recent sessions, stocks showed a strong move back to the upside over the course of the trading day on Friday. The markets benefited from a positive reaction to some Chinese economic data as well as JP Morgan's (JPM) quarterly results.
The major averages saw continued strength going into the close, ending the day firmly in positive territory. The Dow jumped 203.82 points or 1.6 percent to 12,777.09, the Nasdaq surged up 42.28 points or 1.5 percent to 2,908.47 and the S&P 500 soared 22.02 points or 1.7 percent to 1,356.78.
With the day's strong gains, the major averages turned in a mixed performance for the week. While the Nasdaq still fell 1 percent for the week, the S&P 500 rose by 0.2 percent and the Dow edged up by less than 0.1 percent.
The rally on Wall Street, which came after the Dow closed lower in each of the six previous sessions, was partly due to a positive reaction to a report on Chinese economic growth in the second quarter.
While the report showed that Chinese GDP increased at its slowest annual rate in over three years, the rate of growth was not as slow as some had feared. The report also showed that Chinese GDP increased by 1.8 percent compared to the previous quarter, exceeding economist estimates.
Traders also reacted positively to quarterly results from financial giant JP Morgan, which reported better than expected second quarter earnings despite a massive trading loss.
JP Morgan said that the trading loss grew to $4.4 billion from its initial estimate of $2 billion but noted that its Chief Investment Office will no longer trade a synthetic credit portfolio. Shares of JP Morgan rose by 6 percent on the news.
Shares of Wells Fargo (WFC) also moved notably higher after the company reported second quarter earnings that rose year-over-year and came in above analyst estimates. Wells Fargo ended the day up by 3.2 percent.
Meanwhile, traders largely shrugged off a report from Thomson Reuters and the University of Michigan that unexpectedly showed a continued deterioration in consumer sentiment in July.
The report showed that the consumer sentiment index fell to 72.0 in July from the final June reading of 73.2. Economists had been expecting the index to edge up to 73.5.
The Labor Department released a separate report before the start of trading showing that U.S. producer prices unexpectedly saw a modest rebound in the month of June.
In overseas trading, stock markets across the Asia-Pacific region moved modestly higher on Friday, benefiting from a positive reaction to the Chinese GDP data. Japan's Nikkei 225 Index edged up by 0.1 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.
The major European markets showed stronger moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1 percent, the French CAC 40 Index surged up by 1.5 percent and the German DAX Index jumped 2.2 percent.
In the bond market, treasuries gave back some ground after trending higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 1.499 percent.
Banking stocks turned in some of the market's best performances following the news from JP Morgan. Reflecting the strength in the banking sector, the KBW Bank Index surged up by 3.3 percent.
Along with JP Morgan and Wells Fargo, Citigroup (C), SunTrust (STI), and Bank of America (BAC) also posted notable gains on the day.
Significant strength also emerged among software stocks, as reflected by the 2.2 percent gain posted by the Dow Jones Software Index. The gain by the index came after it ended the previous session at its lowest closing level in over a month.
Trucking stocks also moved sharply higher over the course of the trading day, driving the Dow Jones Trucking Index up by 2.3 percent.
Energy, defense, railroad, and chemical stocks also saw considerable strength, reflecting the broad based buying interest on Wall Street.
Earnings season will start to pick up steam next week, with American Express (AXP), Bank of America, Citigroup, Coca-Cola (KO), General Electric (GE), IBM (IBM), Intel (INTC), Microsoft (MSFT), and Yahoo (YHOO) among the slew of companies due to report their quarterly results.
Traders are also likely to keep a close eye on Congressional testimony by Federal Reserve Chairman Ben Bernanke, looking for indications regarding the likelihood of further stimulus.
Key reports on U.S. retail sales, industrial production, housing starts, existing home sales and consumer prices are also likely to attract some attention next week.
by RTT Staff Writer
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