Stocks rally in low volume, dollar up ahead of Fed
By Rodrigo Campos
NEW YORK (Reuters) - Stocks rose sharply on Wall Street and in Europe on Tuesday, supported by growing U.S. retail sales, though caution remained ahead of a possible rate increase by the U.S. central bank later in the week, which would be its first in nearly a decade.
The U.S. dollar index .DXY advanced the most in two weeks, while U.S. oil CLc1 jumped more than 1 percent despite a burst of selling after the White House said it would not support a bill to end the 40-year-old ban on crude oil exports.
Worries about slowing Chinese and global growth and the prospect of higher U.S. borrowing costs have weighed on markets for weeks. However, some expect the Fed to hike rates as a confirmation that the U.S. economy no longer needs supportive measures from the central bank.
The U.S. benchmark S&P 500 index .SPX rose the most in a week but volume on U.S. exchanges was low, with about 5.8 billion shares changing hands, compared with the 8 billion daily average in the last 20 sessions. Traders say low volume helps exaggerate the magnitude of daily moves.
"You're clearly in a wait-and-see mode. The market picked a direction and it's hard for anyone to get in the way, that's where the low volume matters," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
He said if the Fed does not raise rates this week the market will likely see it as a sign of a weakened economy.
The Dow Jones industrial average .DJI rose 228.89 points, or 1.4 percent, to 16,599.85, the S&P 500 .SPX gained 25.06 points, or 1.28 percent, to 1,978.09 and the Nasdaq Composite .IXIC added 54.76 points, or 1.14 percent, to 4,860.52.
The pan-European FTSEurofirst 300 .FTEU3 index ended up 0.85 percent and MSCI's gauge of major equity markets globally .MIWD00000PUS gained 0.75 percent. Continued...