Stocks Close Mostly Higher, Extending Fed-Inspired Rally - U.S. Commentary

(RTTNews) - After moving sharply higher over the course of the two previous sessions, stocks saw some further upside during trading on Friday. With the gains on the day, the major averages further offset the sell-off that was seen earlier this month.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Dow edged up 26.65 points or 0.2 percent to 17,804.80, the Nasdaq rose 16.98 points or 0.4 percent to 4,765.38 and the S&P 500 climbed 9.42 points or 0.5 percent to 2,070.65.

For the week, the major averages all posted strong gains. The Dow surged up by 3 percent, while the Nasdaq and the S&P 500 jumped by 2.4 percent and 3.4 percent, respectively.

The strength on Wall Street continued to reflect a positive reaction to the Federal Reserve's monetary policy statement on Wednesday.

Traders have focused on the Fed's pledge to remain "patient" as well as Fed Chair Janet Yellen's comments indicating that the central bank is unlikely to start the process of normalizing policy for at least the next couple of meetings.

Optimism about the impact of easy monetary policy from other central banks around the world also generated some buying interest.

Allan von Mehren, chief analyst at Danske Bank, also noted that the recent upward move comes on the heels of the sharp pullback seen earlier in December, which dragged the major averages down to their lowest closing levels in over a month.

"It is not unusual that once capitulation has taken place, the market restores some calm, particularly if the underlying growth picture is improving in the U.S. and Europe, as is the case currently," von Mehren said in a research note.

Citing signs of a synchronized recovery in the first half of 2015, von Mehren said he expects stocks to move higher but warned of the risks posed by the situation in Russia.

Nonetheless, overall trading activity remained somewhat subdued on Friday amid a lack of major U.S. economic data and a relatively quiet corporate news day.

Among individual stocks, shares of Red Hat (RHT) moved sharply higher after the open-source software company reported third quarter earnings and revenues that exceeded estimates.

User car dealer CarMax (KMX) also turned in a strong performance after reporting better than expected third quarter results.

Meanwhile, shares of Nike (NKE) moved to the downside after the athletic apparel and equipment giant reported better than expected second quarter earnings but disappointing future orders.

Sector News

Extending a recent recovery, oil service stocks turned in some of the market's best performances on the day. The Philadelphia Oil Service Index surged up by 4 percent, climbing further off the two-year closing low set last Friday.

The continued strength among oil service stocks came amid a notable increase by the price of crude oil, with crude for January delivery jumping $2.41 to $56.52 a barrel.

Other energy stocks also moved higher along with the price of crude oil, driving the NYSE Arca Oil & Gas Index and the NYSE Arca Natural Gas Index up by 3.2 percent and 2 percent, respectively.

Steel stocks also climbed further off their recent lows, resulting in a 2.8 percent advance by the NYSE Arca Steel Index. Russian steel giant Mechel (MTL) posted a standout gain, soaring by 46.5 percent.

Chemical, trucking, and internet stocks also saw significant strength on the day, while gold stocks gave back some ground after rising sharply over the two previous sessions.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable strength during trading on Friday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index jumped by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index shot up by 1.2 percent, the French CAC 40 Index and the German DAX Index fell by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries moved moderately higher, regaining some ground after falling sharply in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 2.176 percent.

Looking Ahead

Many traders are likely to remain away from their desks next week as a result of the Christmas Day holiday on Thursday.

Ahead of the holiday, trading could be impacted by the release of reports on new and existing home sales, durable goods orders, and personal income and spending.