NEW YORK Global equity markets and oil prices climbed for a second day on Friday, providing some relief to bruised investors as frigid weather across the United States and Europe boosted energy demand.
Brent crude oil, which tumbled in recent weeks on worries about oversupply, settled 10 percent higher and above $32 a barrel in one of the biggest daily rallies ever. Traders cashing in short positions lifted prices along with higher short-term demand.
The benchmark S&P 500 U.S. equity index was on track for its first positive week of 2016 thanks to the bounce in oil, which encouraged investors hit by the brutal selloff that began at the start of 2016. Energy led the day's gains, with Exxon Mobil (XOM.N) up 1.7 percent.
"I don't think anyone really believes we've seen the bottom," said Warren West, principal at Greentree Brokerage Services in Philadelphia. "It's a nice bounce, but it's still trading in the range of those August lows and you can't really call it a rally."
After dropping earlier this week to 2014 lows, the S&P 500 has recovered 2.5 percent in the past two sessions. It is still down 7 percent in 2016.
"Even just to get a couple of days here with neutral, rather than downward, movement is going to be a positive because it's going to settle some fears," said Paul Springmeyer, portfolio manager at U.S. Bank's Private Client Reserve in Minneapolis.
"Long-term, the stability of the U.S. economy is really what's at play here, and all signs, with low inflation and low oil prices, are pointing to an ability to move forward and move higher," Springmeyer said.
Brent LCOc1 rose 10 percent to settle at $32.18, well above this week's low of $27.10, while U.S. crude CLc1 rose 9 percent to settle at $32.19.
The MSCI All Country World Index .MIWD00000PUS rose 2.4 percent, while Europe's pan-regional FTSEurofirst 300 index .FTEU3 closed 3.0 percent higher.
On Wall Street, the Dow Jones industrial average .DJI was up 164.19 points, or 1.03 percent, to 16,046.87, the S&P 500 .SPX had gained 32.4 points, or 1.73 percent, to 1,901.39 and the Nasdaq Composite .IXIC had added 98.54 points, or 2.2 percent, to 4,570.60.
Equities have fallen with oil prices amid worries over global growth. Concern about U.S. S&P 500 earnings, which are forecast to post a second straight quarterly profit decline, has hit U.S. stocks as well.
Investors hoping equities can sustain their recent bounce next week will carefully watch the U.S. Federal Reserve's mid-week policy meeting for signs the central bank may slow the path of interest rate hikes.
On Thursday, comments by European Central Bank President Mario Draghi suggested the bank could ease its monetary policy at its March meeting. Investors seized on Draghi's comments and bet that the Bank of Japan might also ease policy further next week.
The dollar rose, boosted by increased expectations of monetary easing by central banks in Europe and Japan, as well as strong U.S. housing data.
The dollar touched a two-week high against the Japanese yen JPY=, rising 0.7 percent to 118.50 yen. The yen has risen nearly 3 percent against the greenback this year as the sell-off in oil and global equity markets encouraged traders to seek out the safe-haven currency.
U.S. Treasuries prices fell as a resurgence in oil and stock prices sparked a fresh wave of selling of safe-haven government debt. Benchmark yields rose further from Wednesday's 3-1/2-month lows.
Benchmark 10-year Treasury notes US10YT=RR were down 18/32 in price to yield 2.082 percent, up 6 basis points from late on Thursday. The 10-year yield climbed from 1.939 percent on Wednesday, the lowest since early October.
(Additional reporting by Noel Randewich in San Francisco and Abhiram Nandakumar in Bengaluru; Editing by Bernadette Baum, Dan Grebler and Nick Zieminski)
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Updated Date: Jan 23, 2016 03:45 AM