Stocks rally as global selloff abates, bonds fall

Fri Oct 17, 2014 4:21pm EDT
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By Herbert Lash

NEW YORK (Reuters) - World equity markets rallied, with European stocks surging the most in more than two years, and bond prices slid on Friday as investors poured back into beaten-down markets on solid U.S. corporate earnings and rising consumer sentiment.

Wall Street followed Europe's lead, with all major stock indexes climbing more than 1 percent after earnings reports eased concerns about the impact of weak global demand on U.S. growth and businesses.

Expectations among some investors that the European Central Bank will increase stimulus also buoyed sentiment.

Results at General Electric (GE.N: Quote), Honeywell International Inc (HON.N: Quote) and Morgan Stanley (MS.N: Quote) topped expectations. GE rose 2.4 percent, Honeywell gained 4.2 percent and Morgan Stanley advanced 2.1 percent.

With 81 companies in the S&P 500 already reporting third-quarter results, 64.2 percent have beaten expectations, a rate slightly below the average over the past four quarters but better than the past 20 years.

U.S. housing starts and permits rose in September, a sign the market's modest recovery is supporting a growing economy, while U.S. consumer sentiment rose in October to the highest in more than seven years.

Despite the rally, the S&P 500 posted a fourth straight weekly decline, its longest streak in more than three years. The U.S. benchmark is down more than 6 percent from a record high in September as concerns about the global economy, a resurgent European debt crisis and the Ebola virus sparked the downturn.

"The reaction the market has had over the past couple of weeks is a bit overdone," said David Lafferty, chief market strategist at Natixis Global Asset Management, which oversees $930 billion in assets.   Continued...

Traders work on the floor of the New York Stock Exchange October 17, 2014. REUTERS/Brendan McDermid