With traders reacting positively to a closely watched speech by Federal Reserve Chairman Ben Bernanke, stocks moved mostly higher over the course of the trading day on Friday. The markets initially reacted negatively to Bernanke's remarks but moved back to the upside shortly afterward.
The major averages ended the day firmly in positive territory but off their best levels of the session. The Dow rose 90.13 points or 0.7 percent to 13,090.84, the Nasdaq advanced 18.25 points or 0.6 percent to 3,066.96 and the S&P 500 climbed 7.10 points or 0.5 percent to 1,06.58.
Despite the gains on the day, the major averages moved modestly lower for the week. The Dow fell by 0.5 percent, while the Nasdaq and the S&P 500 edged down by 0.1 percent and 0.3 percent, respectively.
The strength on Wall Street came on the heels of Bernanke's highly anticipated speech at the Kansas City Fed's Economic Symposium in Jackson Hole, Wyoming.
Bernanke reiterated that the central bank will act "as needed" to boost the sluggish economy, although he did not explicitly signal any further stimulus efforts.
At the same time, analysts noted that a large portion of Bernanke's speech was devoted to touting the effectiveness of the Fed's "nontraditional policies."
Paul Dales, Senior U.S. Economist at Capital Economics, said the speech came across as a "staunch defense of the effectiveness of unconventional monetary policy" and suggested that Bernanke has "taken a further step along the path to more policy stimulus."
With the focus on Bernanke, traders largely shrugged off a batch of U.S. economic data, including a report from Thomson Reuters and the University of Michigan showing that consumer sentiment improved by more than previously estimated in the month of August.
Among individual stocks, shares of OmniVision Technologies (OVTI) moved notably higher after the image sensor maker reported better than expected first quarter revenues and raised its second quarter revenue guidance.
Government IT contractor SAIC, Inc. (SAI) also moved to the upside after reporting second quarter revenues that exceeded analyst estimates. The company also announced plans to separate into two independent, publicly traded companies.
Meanwhile, shares of Zumiez (ZUMZ) came under pressure after the sports equipment retailer forecast third quarter earnings below analyst estimates.
While most of the major sectors moved to the upside on the day, gold stocks posted particularly strong gains. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index surged up by 3.8 percent to its best closing level in over four months.
The strength among gold stocks was largely due to a sharp increase by the price of the precious metal, with gold for December delivery jumping $30.50 to a five-month closing high of $1,687.60 an ounce.
Oil service stocks also saw considerable strength, benefiting from a notable increase by the price of crude oil. With crude for October delivery climbing $1.85 to $96.47 a barrel, the Philadelphia Oil Service Index advanced by 1.7 percent.
Significant strength was also visible among software stocks, as reflected by the 1.4 percent gain posted by the Dow Jones Software Index. Housing, semiconductor, and steel stocks also posted strong gains amid broad based buying interest on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index ended the day down by 0.4 percent.
Meanwhile, the major European markets ended the day mixed. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index and the German DAX Index surged up by 1 percent and 1.1 percent, respectively.
In the bond market, treasuries moved notably higher over the course of the trading session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.8 basis points to 1.562 percent.
Two key events are likely to stage center stage next week, the European Central Bank's monetary policy meeting on Thursday and the Labor Department's monthly U.S. jobs report on Friday.
Along with the jobs report, traders will also be presented with U.S. reports on manufacturing and service sector activity, labor productivity, and construction spending.
by RTT Staff Writer
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