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US: Stocks jump 2.5%, joining global rally

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[NEW YORK] US stocks jumped 2.5 per cent Friday, joining a global rally after surprise stimulus by the Bank of Japan raised confidence of further central bank moves to boost growth.

The Dow Jones Industrial Average gained 396.66 points (2.47 per cent) at 16,466.30.

The broad-based S&P 500 advanced 46.88 (2.48 per cent) to 1,940.24, while the tech-rich Nasdaq Composite Index rose 107.28 (2.38 per cent) to 4,613.95.

The Bank of Japan adopted a below-zero interest rate policy, essentially charging lenders to park their cash with it. The move helped spur stocks higher in Europe and Asia.

Stocks picked up further momentum following government data showing the US economy grew an anemic 0.7 per cent in the fourth quarter. Analysts said the weak growth reduced the chances the Federal Reserve will move quickly to hike interest again.

"This basically sets the tone that central banks are going to have to boost the economy," said Peter Cardillo, chief market economist at First Standard Financial.

Stocks were also bolstered by oil prices, which rose for the fourth day in a row. The gain lifted petroleum-linked stocks, including Marathon Oil and Halliburton, which jumped 6.1 per cent and 4.4 per cent, respectively.

Chevron rose a more modest 0.6 per cent after reporting a surprise loss for the fourth quarter due to the slump in oil prices. Chevron lost US$588 million compared with net income of US$3.5 billion in the year-ago period.

Amazon sank 7.6 per cent after it reported fourth-quarter profits of US$482 million, up from US$214 million a year ago behind a 22 per cent rise in revenue. Some analysts expressed worry about an outlook that included a projection for first-quarter operating income of US$100-700 million.

But some other large technology shares rose. Apple and Intel both surged 3.5 per cent and Cisco Systems advanced 3.0 per cent.

Microsoft jumped 5.8 per cent after reporting fourth-quarter net income of US$5.8 billion in better-than-expected results that showed growth in its cloud-computing business.

Banking shares enjoyed a good session, with Citigroup gaining 5.4 per cent, JPMorgan Chase 3.9 per cent and Bank of America 4.5 per cent.

Visa powered 7.4 per cent higher on better-than-expected earnings, while Mastercard gained 6.7 per cent after also beating analyst estimates.

AFP