NEW YORK A gauge of stocks across major markets was poised for a fifth week of gains on Friday, its longest weekly run in more than two years, as the dollar's weakness and an apparent bottom in commodity prices combined to draw investors into risk assets.
The dollar index rose slightly but was set to close lower for the third consecutive week, most recently weighed by the Federal Reserves' resetting of market expectations on the number of rate hikes from the U.S. central bank in 2016.
Oil prices slipped after hitting 2016 peaks, with Brent and U.S. crude both up for the week on expectations of a production freeze by major exporters and stronger U.S. fuel demand.
On Wall Street, the S&P 500 was on track to close in positive territory for the first time this year. Healthcare and financial sector stocks were among the leaders, a welcome signal of rotation for stock bulls.
With the fear of a U.S. recession mostly in the rear-view mirror, investors want to add to stock exposure and are buying up the year's worst performers, according to Art Hogan, chief market strategist at Wunderlich Securities in New York.
"You want to see sector rotation into the laggards," he said, noting that the rise to positive territory for the S&P 500 could mean the five-week stocks rally could lose steam.
"What we've seen is enough good news to say we're not going into recession. This is a short-term top in a longer-term bull market."
The Dow Jones industrial average .DJI rose 126.97 points, or 0.73 percent, to 17,608.46, the S&P 500 .SPX gained 9.06 points, or 0.44 percent, to 2,049.65 and the Nasdaq Composite .IXIC added 19.68 points, or 0.41 percent, to 4,794.66.
European stocks ended up on Friday but slightly lower for the week. MSCI's index of stocks in major developed markets .MIWD00000PUS gained 1.4 percent this week and stocks in emerging markets .MSCIEF jumped 3.2 percent in their third straight weekly advance.
DOLLAR TICKS UP
The dollar index .DXYbounced back from a five-month low, rising against most major currencies, as traders covered short positions in the wake of the Fed's statement on Wednesday.
The yen gave back 0.3 percent versus the dollar JPY= after hitting its strongest on Thursday since October 2014. The euro slipped 0.45 percent to $1.1266.
On Friday, the European Central Bank's chief economist, Peter Praet, indicated the ECB could further loosen monetary policy.
"It's been a dizzying selloff for the dollar, so it's natural that you're going to get some kind of bounce," said FX Analytics partner David Gilmore in Essex, Connecticut.
A rising dollar in 2015 weighed on the global economy, and its recent decline has helped push up oil and other commodity prices.
U.S. crude prices slipped after trading above $41 a barrel for the first time since early December as the weekly U.S oil rig count rose for the first time since December. U.S. crude CLc1 settled up for a fifth straight week.
Brent crude's front-month contract LCOc1 fell 0.4 percent to $41.36 a barrel after touching a 2016 high of $42.54.
The benchmark U.S. Treasury note US10YT=RR rose 9/32 in price to yield 1.8714 percent.
(Reporting by Rodrigo Campos, additional reporting by Dion Rabouin, Gertrude Chavez-Dreyfuss, Barani Krishnan and Laila Kearney; Editing by Dan Grebler)
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