Rally On Wall Street Drives Dow Back Above 13,000

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Friday, adding to the strong gains posted in the previous session. The markets benefited from some relatively upbeat U.S. economic data as well as the latest news out of Europe.

The major averages ended the day firmly in positive territory, with the Dow closing above 13,000 for the first time in well over two months. The Dow jumped 187.73 points or 1.5 percent to 13,075.66, the Nasdaq soared 64.84 points or 2.2 percent to 2,958.09 and the S&P 500 spiked up 25.95 points or 1.9 percent at 1,385.97.

With the gains on the day, the major averages all closed higher for the week. The Dow rose 2 percent for the week, while the Nasdaq advanced 1.1 percent and the S&P 500 climbed 1.7 percent.

The rally on Wall Street was partly due to the release of a report from the Commerce Department showing that the pace of U.S. economic growth slowed by less than anticipated in the second quarter.

The report said GDP increased by 1.5 percent in the second quarter compared to an upwardly revised 2.0 increase in the first quarter. Economists had been expecting GDP to increase by about 1.2 percent.

While the report points to continued economic growth, analysts noted that the slowdown still leaves the door open for further stimulus from the Federal Reserve.

Meanwhile, Thomson Reuters and the University of Michigan released a separate report showing that consumer sentiment deteriorated by less than previously estimated in the month of July.

The report showed that the consumer sentiment index for July was upwardly revised to 72.3 from the mid-month reading of 72.0. Despite the upward revision, the index remains down compared to the final June reading of 73.2 and is well below the nearly five-year high of 79.3 seen in May.

Stocks saw further upside following a report from Bloomberg indicating that European Central Bank President Mario Draghi will meet with the president of Germany's Bundesbank Jens Weidmann to discuss new measures to address the ongoing debt crisis.

Citing two central bank officials, Bloomberg said Draghi is seeking to win over ECB policy makers for a multi-pronged approach to reduce bond yields in countries such as Spain and Italy.

In remarks at an investment conference on Thursday, Draghi promised to do whatever is necessary to support to beleaguered eurozone.

Among individual stocks, shares of Merck (MRK) advanced by 4.1 percent after the drug giant reported better than expected second quarter earnings. The company benefited from an increase in sales of its diabetes drugs.

Biotech giant Amgen (AMGN) also turned in a strong performance after reporting second quarter results that exceeded analyst estimates and raising its full-year guidance. Shares of Amgen rose by 5.8 percent.

On the other hand, shares of Facebook (FB) bucked the uptrend after the social networking giant reported second quarter results that came roughly in line with analyst estimates but disappointed investors by failing to provide guidance. Facebook tumbled by 11.7 percent on the day.

Sector News

Most of the major sectors showed strong moves to the upside over the course of the trading day, reflecting broad based buying interest on Wall Street.

As was the case in the previous session, electronic storage stocks turned in some of the market's best performances on the day. The NYSE Arca Disk Drive Index surged up by 6.3 percent to its best closing level in almost three months.

Internet stocks also moved sharply higher on the day, driving the NYSE Arca Internet Index up by 3.9 percent. Online travel agency Expedia (EXPE) helped to lead the sector higher, jumping by 20.1 percent after reporting better than expected second quarter results.

Significant strength also emerged among oil service stocks, as reflected by the 2.7 percent gain posted by the Philadelphia Oil Service Index. The strength in the sector was partly due to an increase by the price of crude oil, with crude for September delivery climbing $0.74 to $90.13 a barrel.

Steel, brokerage, transportation, and telecom stocks also posted notable gains on the day, moving higher along with the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged up by 1.5 percent, while Hong Kong's Hang Seng Index jumped by 2 percent.

The major European markets also showed strong moves to the upside on the day, adding to Thursday's strong gains. While the U.K.'s FTSE 100 Index rose by 1 percent, the German DAX Index advanced by 1.6 percent, and the French CAC 40 Index soared by 2.3 percent,

In the bond market, treasuries moved sharply lower over the course of the session, pulling back further off their recent record highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.7 basis points to 1.555 percent.

Looking Ahead

Trading could be extremely volatile next week as traders digest monetary policy decisions in both the U.S. and Europe as well as the monthly U.S. jobs report.

Reports on U.S. personal income and spending, consumer confidence, and manufacturing and service sector activity may also attract some attention.

On the earnings front, Pfizer (PFE), Procter & Gamble (PG), MasterCard (MA) MetLife (MET), Time Warner (TWX), Tyco (TYC), and Kellogg (K) are among the well-known companies that are due to release their quarterly results next week.

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