Sat, June 23, 2012
Business > Markets

U.S. stocks rally after huge sell-off

2012-06-22 21:53:49 GMT2012-06-23 05:53:49(Beijing Time)  Xinhua English

NEW YORK, June 22 (Xinhua) -- U.S. stocks closed broadly higher on Friday after the Dow hit its second biggest drop in 2012, leading by rebounded financial shares.

The equity market was boosted by financial shares, despite ratings agency Moody's Investors Service announced on Thursday that it downgraded the world's 15 biggest banks, including five U. S banks -- Bank of America, Morgan Stanley, Citigroup, Goldman Sachs and JPMorgan.

Traders at New York Stock Exchange told Xinhua that bank shares rebounded because in the last trading day, shares were over sold. Meanwhile, Friday's rally was partly because of the sharp drop in the equity market on Thursday. The sharp decline was due to disappointing manufacturing data.

The Federal Reserve Bank of Philadelphia said in the previous trading day that manufacturing activity in the bank's region fell to negative 16.6 in June, the lowest level since August 2011, from negative 5.8 in May.

Stephen J. Guilfoyle, an economist with Meridian Equity Partners, told Xinhua on Friday that the Philly Fed number really sounded the alarm because it revealed that the manufacturing sector, at least in the mid-Atlantic region, was seeing sharp contraction in new orders, shipments, deliveries, and the work week. "This is the second straight month of contraction for this item, and some fear it is indicative of a coming summer of trouble for manufacturing sector nationally," he said.

However, although the economic concerns drove the market down the south, many investors on Friday wanted to buy after the huge sell-off.

Euro zone concerns still haunted the market. Italian Prime Minister Mario Monti has warned of the apocalyptic consequences of failure at next week's summit of EU leaders, outlining a potential death spiral that could threaten the political and economic future of Europe.

Fortunately, there was some boosting news in the region. The European Central Bank said it would soon accept a wider range of collateral for loans, including lower rated securities and some asset-backed debt secured by car loans as well as consumer and commercial mortgages. The announcement was the central bank's latest effort to help ease European bank's funding stresses.

The Dow Jones industrial average gained 67.21 points, or 0.53 percent, to close at 12,640.78. The Standard & Poor's 500 was up 9. 51 points, or 0.72 percent, to 1,335.02. The Nasdaq Composite Index rose 33.33 points, or 1.17 percent, to 2,892.42. In other markets, crude prices rebounded on Friday from the multi-month lows on the previous trading session.

Light, sweet crude for August delivery gained 1.56 dollars, or 1.99 percent to settle at 79.76 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for August delivery also rose above the important supporting level of 90 dollars and last traded around 91 dollars a barrel. The U.S. dollar traded mixed against major currencies in late New York trading on Friday after the ECB announcement mentioned above. The dollar index edged down 0.046 to 82.442.

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