Global commodities, stocks rally as dollar tumbles

Thu Mar 17, 2016 5:06pm EDT
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By Rodrigo Campos

NEW YORK (Reuters) - The U.S. dollar index dropped to a five-month low on Thursday while shares on Wall Street rallied to lead global equities higher as a dovish U.S. Federal Reserve emboldened investors to take on more risk.

The S&P 500 briefly turned positive for the year and closed at its highest since Dec. 31, led by the materials and energy sectors. The Dow industrials .DJI ended above its 2015 closing level for the first time this year.

Traders continued to digest the previous day's statement and projections from the Fed, which scaled down to two its expectations of the number of U.S. rate hikes likely over the next nine months. It previously estimated four hikes through 2016.

As the dollar declined, commodity prices rose to their highest since December .TRJCRB, as did stocks across emerging markets .MSCIEF. Stocks in geographies and sectors heavily reliant on manufactured exports, like Japan .N225 and European automakers, fell.

"It's a continued reaction from the Fed's move yesterday," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York. "It's a pretty equity-friendly backdrop."

The Fed on Wednesday pointed to moderate U.S. economic growth and strong job gains while remaining cautious about risks from an uncertain global economy.

The Dow Jones industrial average .DJI rose 155.73 points, or 0.9 percent, to end at 17,481.49, the S&P 500 .SPX gained 13.37 points, or 0.66 percent, to 2,040.59 and the Nasdaq Composite .IXIC added 11.02 points, or 0.23 percent, to 4,774.99.

Despite Europe's .FTEU3 0.1 percent decline, MSCI's gauge of shares in developed markets .MIWD00000PUS climbed 1.5 percent on the day to close at its highest since Dec. 31.   Continued...

A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York, March 14, 2016. REUTERS/Lucas Jackson