Stocks rally on U.S. data, euro slides further
By Herbert Lash
NEW YORK (Reuters) - Wall Street stocks rebounded on Friday on signs the U.S. economy was on track for solid growth with consumer sentiment hitting an 11-year high, while the euro slid further against the dollar a day after Switzerland ditched its currency cap.
Crude prices rallied on the U.S. sentiment report and after the International Energy Agency said lower prices had begun to curb production in some areas, including North America. The IEA said prices might fall further, but "signs are mounting that the tide will turn."
U.S. gasoline prices fell again in December, leading consumer prices to post their biggest decline in six years, while a gauge of underlying inflation was flat. The data could make the Federal Reserve cautious about raising interest rates.
Global equity markets rebounded, with U.S. stocks capping five straight sessions of losses. European shares rose on growing expectations of economic stimulus from the European Central Bank.
Wall Street surged at the close. Major U.S. indexes rose more than 1 percent in what Ken Polcari, director of the NYSE floor division of O'Neil Securities in New York, said had the makings of a relief rally.
"The market has been under complete duress for five or six days, the tone has been very ugly. Today it seems most things have calmed down, so buyers have started to step back in," he said.
The University of Michigan said U.S. consumer sentiment rose in January on employment and income gains, with spending power boosted by sliding gasoline prices.
The "outstanding" report countered fears that tumbling oil prices would curb growth, said Phil Orlando, chief equity strategist at Federated Investors in New York. He said cheaper energy will boost discretionary spending, and added that a disappointing retail sales report this week excluded online sales and gift cards and was skewered by seasonal factors. Continued...