Stocks rallied sharply Friday after a better-than-expected reading on manufacturing and encouraging news out of Europe assuaged investors' fears over the possibility of a double-dip recession.
The blue-chip Dow Jones Industrial Average ($INDU) rose 198 points, or 1.9%, to close at 10,860. A surprise jump in August orders for durable goods peaked traders' interest in the industrial sector. Dow components Alcoa (AA), Caterpillar (CAT) and Boeing (BA) popped more than 3% to 4%.
The broader S&P 500 ($INX) added 24 points, or 2.1%, to 1,149, putting it on the cusp of its next technical hurdle at the 1,150 level. The more volatile, tech-heavy Nasdaq Composite ($COMPX) jumped 54 points, or 2.3%, to finish at 2,381.
Stocks Extend Winning Streak
After languishing over the last few sessions, equities managed to extend their winning ways to a fourth consecutive week, the longest sustained rally since late April when the markets hit their last peaks. Encouraging economic news at home and abroad gave equities a lift, but volume was once again light.
Doreen Mogavero, CEO, co-founder and head of floor trading at Mogavero, Lee & Co., says the market may be starting to reflect the possible outcome of the November mid-term election in light of the results of this week's primaries.
Durable Goods Boost Confidence
Although August's 1.3% drop in durable goods orders looked like a decidedly downbeat report, the real story was that the more-telling component that excludes volatile transportation orders rose 2%, doubling a economists' average estimate.
The rally at home followed strong gains in Europe overnight, which was touched off by a report that German business confidence unexpectedly vaulted to a three-year high.
Investors flight back to riskier assets hurt bonds and the U.S. dollar, while gold prices continued their remarkable upward climb.
The yield on the benchmark 10-Year Treasury note, which moves in the opposite direction of price, climbed above 2.6% level. The ICE U.S. Dollar index, which measures the greenback against a trade-weighted basket of foreign currencies, fell below 80 for the first time since April.
Gold prices continued to soar Friday, as the most actively traded gold contract on the Comex of the New York Mercantile Exchange (NYX) settled just two dollars shy of $1,300 an ounce. Copper and oil prices also rose Friday.