Wall Street rallies on data; dollar falls versus yen

Thu Jun 13, 2013 4:38pm EDT
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By Wanfeng Zhou

NEW YORK (Reuters) - Wall Street stocks rallied more than 1 percent on Thursday after stronger-than-expected U.S. economic data offset worries about a pullback in central bank stimulus, while the U.S. dollar slumped to a 10-week low against the yen.

The gains in U.S. equities followed a 6.4 percent drop overnight in Japan's Nikkei .N225, its second-biggest daily drop in more than two years. European markets lost more than 1 percent before recovering to end slightly lower.

U.S. retail sales rose more than expected in May and first-time applications for unemployment benefits fell last week, signs of economic resilience in the face of belt-tightening in Washington.

"The bright spot for the entire week was the data point today on U.S. retail sales. That data supports the notion that the U.S. consumer is moving forward with spending despite the uncertainty of Fed tapering," said Anastasia Amoroso, global market strategist at J.P. Morgan Funds in New York.

The Dow Jones industrial average .DJI ended up 180.85 points, or 1.21 percent, at 15,176.08. The Standard & Poor's 500 Index .SPX gained 23.84 points, or 1.48 percent, to 1,636.36. The Nasdaq Composite Index .IXIC rose 44.94 points, or 1.32 percent, to 3,445.36.

Concern about a sooner-than-expected withdrawal of central bank support mounted after recent comments from Federal Reserve Chairman Ben Bernanke on the Fed's stimulus program and a decision by the Bank of Japan earlier this week to hold off on easing further.

The worries have fueled a selloff in global equities, emerging markets, risky bonds and commodities, all of which have been buoyed by central bank liquidity, while driving the safe-haven yen sharply higher.

The Federal Reserve meets next Tuesday and Wednesday. Some analysts said if the Fed does not hint at an imminent exit from its quantitative easing next week, the market could see a relief rally.   Continued...

A trader looks at his screen on the Unicredit Bank trading floor in downtown Milan June 13, 2013. World shares fell and the dollar slumped on Thursday as a sell-off on global financial markets accelerated on concerns over whether central banks will continue the stimulus they have come to rely on. REUTERS/Alessandro Garofalo