U.S. equities traded higher on Friday as European and American bank stocks — as well as oil prices — bounced sharply, while investors digested U.S. economic data.
“I definitely urge caution, but the conditions are there for a short-term bounce,” said Adam Sarhan, CEO of Sarhan Capital.
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The S&P 500 index gained 1.5 percent, as financials rose 3.42 percent. The financial sector, however, was on track for a nearly 3 percent weekly loss.
“It would really be an accomplishment if we can hold 1,850 on the S&P,” said JJ Kinahan, chief strategist at TD Ameritrade.
The Nasdaq composite rose 1.4 percent, but was on pace to fall about 1 percent week to date.
“We’re going to need a lot more than this to gain some ground,” said Randy Warren, chief investment officer at Warren Financial Service. “I wouldn’t get my hopes up but oil has to hit bottom at some point.”
In Europe, shares of Deutsche Bank rose 11.8 percent after the bank said it was buying back over $5 billion in bonds, while Commerzbank’s stock gained 18.02 percent amid a strong earnings report.
The pan-European STOXX 600 index rose 2.91 percent.
“Let’s hope we can hold on to a bid higher, especially heading into a long weekend with the specter of China looming,” said Art Hogan, chief market strategist at Wunderlich Securities.
Markets in mainland China have been closed this week due to the Lunar New Year Holiday and are scheduled to reopen Monday. However, U.S. markets will be closed on Monday due to the President’s Day holiday.
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U.S. oil prices also boosted stock prices in the U.S., as WTI (New York Mercantile Exchange: @CL.1) settled 12.32 percent higher, or $3.23, at $29.44 a barrel.
“The proposed deal for a cease-fire in Syria might hep bring the Saudis to the table for an OPEC deal,” said Peter Cardillo, chief market economist at First Standard Financial. “I believe one of the reasons oil prices are so low is geopolitical.”
WTI settled 4.5 percent lower on Thursday, but began paring most of those losses after a report surfaced that OPEC was ready to cooperate with a production cut.
“We hit a new low and tons of short covering came into the market. that UAE headline was well timed,” said John Kilduff, founding partner of Again Capital. “They arguably held the bottom. from a technical perspective on a short term basis.”
U.S. equities fell sharply Thursday amid a global sell-off, with the Dow falling more than 250 points.
Investors also digested U.S. retail sales, which rose 0.2 percent in January, above the 0.1 percent expected gain. Import prices in the U.S. fell 1.1 percent, less than expected.
“Bottom line, notwithstanding a pretty ugly month in the markets, the prospect of better wage growth seemed to help lift retail sales after a disappointing December. I’m not going to say lower gasoline prices was the reason for better than expected sales because if it hasn’t been a lift so far because of a variety of cost of living offsets, why should it all of sudden been one in January,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
“If you take a look at the jobs data and retail sales, there are few signs that the U.S. economy is heading into a recession,” Wunderlich’s Hogan said.
Other data points due Friday included consumer sentiment, which came in below expectations, and business inventories, which rose 0.1 percent in December.
U.S. Treasury yields rose on Friday, with the 10-year (U.S.:US10Y) yield trading at 1.75 percent, after briefly falling below the 1.55 percent mark on Thursday.
“You don’t see that kind of move normally,” Hogan said. “That’s indicative of some of that flight-to-safety money coming back into risk assets.”
Other traditional safe havens fell on Friday, including gold, which gained more than $50 on Thursday. Gold futures for April delivery (CEC:Commodities Exchange Centre: @GC.1) settled at $1,239.40 an ounce, down $8.40.
The dollar gained 0.67 percent against the euro (Exchange:EUR=) and 1 percent against the yen (Exchange:JPY=).
Investors also digested comments from New York Fed President William Dudley, in which he said the key components of the U.S.economy remain healthy. He also said that any talk about negative interest rates coming to the U.S. is “extraordinarily premature.”
The Dow Jones industrial average (Dow Jones Global Indexes: .DJI) traded 251 points higher, or 1.6 percent, at 15,910, with JPMorgan Chase leading advancers and Johnson & Johnson the greatest laggard.
The S&P 500 (^GSPC) gained 27 points, or 1.5 percent, to trade at 1,856, as financials led nine sectors higher and utilities lagged.
The Nasdaq (^IXIC) rose 56 points, or 1.3 percent, to 4,322.
The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, traded near 26.
Advancers led decliners 4 to 1 on the New York Stock Exchange, with an exchange volume of 649 million and a composite volume of 3.048 billion as of 2:21 p.m. ET.
High-frequency trading accounted for 49 percent of February’s daily trading volume of about 9.66 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.
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