Wall Street ended the week on an up note on Friday as cooling oil prices diminished fears that the economy could be further singed by inflationary pressures and after the US Federal Reserve kept interest rates on hold.
Market action remained volatile through the week, as stocks dived and rallied on alternate days, but finished out the week notably above closing values a week ago.
Investors appeared to largely take in their stride the vast losses announced by mortgage finance giants Freddie Mac and Fannie Mae and announcements by major banks that they would be buying back billions of dollars of tainted securities affected by the credit crunch.
Wall Street booked gains early in the week on Tuesday as the Fed opted to keep its main interest rate pegged at 2 percent as policymakers adopted a wait-and-see approach to lackluster economic growth.
The Dow Jones Industrial Average of 30 blue-chip shares rose 3.6 percent in the week to Friday, to end at 11,734.32, while the broad-market Standard & Poor’s 500 index gained 2.85 percent to 1,296.32.
The technology-laden NASDAQ composite surged 4.46 percent for the week to 2,414.10 as investors prepared for fresh economic reports in the coming week.
“Volatility remained high in both the US equity and fixed income markets last week,” economists at Global Insight said in a briefing note.
“However, a less hawkish statement on policy from the FOMC [Federal Open Market Committee] on Aug. 5, combined with sharply declining energy prices, provided a powerful lift for Dow Jones industrials last week, despite generally weak economic reports,” the Global Insight economists said.
Traders said the markets would be keeping a close eye on oil prices in the coming week and that a government survey on retail sales during July, due for release Wednesday, would also be on Wall Street’s radar.
Bond prices ended the week mixed as the yield on the 10-year Treasury bond rose slightly to 3.950 percent from 3.948 percent a week earlier, while that on the 30-year bond dropped to 4.555 percent from 4.569 percent.
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