Stocks edge higher after huge two-day rally
NEW YORK - Financial markets pushed higher Friday as stocks sustained their momentum following a huge two-day rally.
The Dow Jones industrial average rose 27 points, or 0.2, percent to finish the week at 17,805. The Standard & Poor's 500 added 9 points to close at 2,071, while the Nasdaq composite index gained 17 points to 4,765.
The Dow soared 421 points, or 2.4 percent, on Thursday, the blue-chip index's biggest one-day gain three years.
At the start of the week, falling oil prices and the state of the world economy were investors' main worries. A plunge in the Russian ruble didn't help.
But stock markets staged a turnaround Wednesday, when Janet Yellen, the Federal Reserve chair, said she saw no reason to hike interest rates in early 2015 and that the central bank would be "patient" in deciding when to raise rates from near zero. Her comments eased concerns that the Fed would start raising rates when economies outside the U.S. have flagged. Traders celebrated, driving the S&P 500 up 4.5 percent over two days.
"It's just crazy volatility," said Jim Paulsen, chief investment strategist and economist at Wells Capital Management. Paulsen pointed to the magnitude of the market's turn. Before the Fed's statement came out on Wednesday, the S&P 500 was down for the week. Two days later, it's headed toward one of its best weeks this year.
Investors also seem upbeat about the direction of the U.S. economy. Industrial production rose 1.3 percent in November, nearly double what forecasters had predicted and the largest gain since May 2010, according to PNC Financial Services Group. Consumers also continue to get a boost from declining energy costs, with gas prices falling 6.6 percent in November.
"The major equity markets are finishing the trading year on a positive note thanks to Janet Yellen's Christmas message," said Neil MacKinnon, global macros strategist at VTB Capital. He said that with no major economic reports coming out, the markets will soon "switch into holiday mode," as traders head off for vacations.
Benchmark U.S. crude rose on Friday from recent lows, climbing $3.13 to $57.51 a barrel on the New York Mercantile Exchange. Crude oil prices had fallen by nearly half since June, when it hit a peak of $107, a result of rising supply and weakening demand.
U.S. government bond prices rose, nudging yields down. The yield on the benchmark 10-year Treasury note slipped to 2.18 percent.
Prices for precious and industrial metals rose. Gold edged up $1.20 to $1,196 an ounce, silver added 10 cents to $16.03 an ounce. Copper rose 3 cents to $2.88 a pound.