Dollar dives, helping boost oil; Dow, S&P gain
By Lewis Krauskopf
NEW YORK (Reuters) - The U.S. dollar tumbled on Wednesday after comments from a Federal Reserve official and a soft services sector report suggested a slowing pace of rate hikes, sparking a rally in oil prices that also boosted U.S. equities.
U.S. crude settled up 8 percent as the weakness in the dollar helped oil and other commodities priced in the currency. U.S. Treasury yields fell to one-year lows before recovering.
The Dow Jones industrials closed up 1.1 percent, helped by oil stocks, in a volatile day which saw the key index sway in a 420-point range.
"The 8-percent rise in oil and the weakening dollar are the two things that seem to be kind of winning the day in terms of finally moving stocks into the plus side," said Chuck Carlson, chief executive at Horizon Investment Services in Hammond, Indiana.
The Dow Jones industrial average .DJI rose 183.12 points, or 1.13 percent, to 16,336.66, the S&P 500 .SPX gained 9.5 points, or 0.5 percent, to 1,912.53 and the Nasdaq Composite .IXIC dropped 12.71 points, or 0.28 percent, to 4,504.24.
Activity in the vast U.S. services sector slowed to a near two-year low in January, suggesting that economic growth weakened further at the start of the first quarter even as the labor market remains resilient.
The pan-European FTSEurofirst 300 index .FTEU3 fell 1.6 percent amid disappointing earnings from Finnish state-controlled utility Fortum FUM1V.HE and Dutch telecoms group KPN (KPN.AS: Quote).
MSCI's 46-country All World share index .MIWD00000PUS was flat. Continued...