Stocks Rally On Bargain Hunting, Rebound By Oil - U.S. Commentary

(RTTNews) - After trending lower over the past several sessions, stocks saw a significant rebound over the course of the trading day on Friday. The strong gains on the day halted five-day losing streaks by both the Dow and the S&P 500.

The major averages ended the session at or near their best levels of the day. The Dow soared 313.66 points or 2 percent to 15,973.84, the Nasdaq jumped 70.67 points or 1.7 percent to 4,337.51 and the S&P 500 surged up 35.70 points or 2 percent to 1,864.78.

Despite the rebound on the day, the major averages still closed lower for the week. The Dow slumped by 1.4 percent, while the Nasdaq and the S&P 500 fell by 0.6 percent and 0.8 percent, respectively.

Bargain hunting contributed to the rally on Wall Street, with some traders picking up stocks at reduced levels following recent weakness.

The losses posted in the previous session dragged the Dow down to a two-year closing low, while the Nasdaq and the S&P 500 once again ended the session at their lowest closing levels in well over a year.

The markets also benefited from a sharp increase by the price of crude oil, with crude for March delivery soaring $3.23 to $29.44 a barrel on optimism about possible production cuts.

Amid ongoing oversupply concerns, the price of crude oil tumbled $1.24 in the previous session to a nearly thirteen-year closing low of $26.21 a barrel. Positive sentiment was also generated by a report from the Commerce Department showing that U.S. retail sales rose slightly more than expected in January.

The Commerce Department said retail sales climbed by 0.2 percent in January compared to economist estimates for a 0.1 percent uptick.

The report also showed that retail sales in December rose by an upwardly revised 0.2 percent compared to the 0.1 percent drop initially reported.

Core retail sales, which exclude autos, gasoline, and building materials, increased by 0.6 percent in January following a 0.3 percent decrease in December.

Meanwhile, a separate report from the University of Michigan showed an unexpected deterioration in consumer sentiment in the month of February.

The report said the preliminary reading on the consumer sentiment index for February came in at 90.7 compared to the final January reading of 92.0. The index had been expected to inch up to 92.5.

Among individual stocks, shares of Groupon (GRPN) moved sharply higher on the day after the daily deals company reported better than expected fourth quarter results.

Hotel and casino operator Wynn Resorts (WYNN) also saw notable strength after reporting fourth quarter earnings that came in well above analyst estimates.

On the other hand, shares of Activision Blizzard (ATVI) came under pressure after the video game publisher reported fourth quarter results that missed expectations and provided disappointing guidance.

Sector News

After falling sharply in recent sessions, banking stocks showed a substantial move back to the upside on the day. The Dow Jones Banks Index surged up by 6 percent, bouncing off a nearly three-year closing low.

Industry giant JP Morgan (JPM), Citigroup (C), and Bank of America (BAC) turned in some of the banking sector's best performances.

Significant strength was also visible among biotechnology stocks, as reflected by the 4.1 percent gain posted by the NYSE Arca Biotechnology Index. The index ended the previous session at its lowest closing level in well over a year.

Energy stocks also regained ground following recent weakness, benefiting from the sharp increase by the price of crude oil. The NYSE Arca Oil & Gas Index and the Philadelphia Oil Service Index jumped 3.5 percent and 3.2 percent, respectively.

Steel, housing, gold, and transportation stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plummeted by 4.8 percent, while Hong Kong's Hang Seng Index tumbled by 1.2 percent.

Meanwhile, the major European markets moved sharply higher on the day. While the U.K.'s FTSE 100 Index surged up by 3.1 percent, the German DAX Index and the French CAC 40 Index both jumped by 2.5 percent.

In the bond market, treasuries saw a notable pullback after moving sharply higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.4 basis points to 1.748 percent.

Looking Ahead

Following the holiday weekend, next week's trading may be impacted by reports on housing starts, industrial production, and producer and consumer price inflation.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which could shed some light on the outlook for interest rates.