[NEW YORK] US stocks enjoyed one of their best weeks of the year as investors grew more confident that dovish monetary policy would persist, overlooking concerns about earnings and slower economic growth.
The broad-based S&P 500 gained 63.53 points (3.26 per cent) at 2,014.89, notching the biggest weekly gain since December 2014.
The Dow Jones Industrial Average advanced 612.12 (3.72 per cent) to 17,084.49, its best gain since February, while the tech-rich Nasdaq Composite Index rose 122.69 (2.61 per cent) to 4,830.47.
Stocks kept their momentum from last Friday, when markets rallied after a poor US jobs report was seen as dimming the prospects for a speedy Federal Reserve interest rate hike.
"What's happening is people are comfortable moving back into stocks because they see the Fed as out of the picture for the time being," said Chris Low, chief economist at FTN Financial.
That view was only strengthened by Thursday's minutes from the Fed September 16-17 monetary policy meeting, when the central bank voted to delay a rate hike, citing worries about slowing global growth and its impact on the US economy.
"Recent global and financial market developments might restrain economic activity somewhat as a result of the higher level of the dollar and possible effects of slower economic growth in China and in a number of emerging-market and commodity-producing economies," the minutes said.
On Tuesday, the International Monetary Fund, warning of increasing risks from the slowdown in China, cut its global growth forecast to just 3.1 per cent this year and 3.6 per cent next year, each 0.2 percentage point lower than its July forecast.
EARLY EARNINGS ARE LACKLUSTER
Also of concern were early signs that third-quarter earnings will disappoint. Analysts are expecting that earnings for S&P 500 companies will be 5.12 per cent lower than in the year-ago period, according to S&P Capital IQ.
Alcoa, traditionally an early reporter, said third-quarter profit fell 70.4 per cent to US$44 million as the company trimmed its outlook for key Chinese businesses.
Agricultural seed giant Monsanto reported a quarterly loss of US$495 million and announced plans to cut 2,600 jobs, while fast-food company Yum Brands, parent of KFC and Taco Bell chains, lowered its earnings forecast due to sluggish sales in China.
Some analysts caution that the momentum that lifted the market this week could erode.
"The big concern remains on China and the emerging-market economies," said Tom Cahill, portfolio strategist at Ventura Wealth Management.
"To the extent the Fed is out of the way for now, these markets can stabilise, but there's still a lot of concerns out there." Prominent activist investors drove other major announcements this week.
Mining company Freeport-McMoRan rallied on news that it reached a deal with Carl Icahn to appoint two Icahn associates to the board and is considering spinning off its oil and gas business.
General Electric got a boost when activist investor Nelson Peltz's Trian Fund Management took a one percent stake in the industrial conglomerate.
Peltz also figured into the surprise announcement that DuPont chief executive Ellen Kuhlman would resign, only months after turning back a Peltz campaign to win four board seats in the 213-year-old chemical company.
In other executive news, Twitter gained momentum after announcing that interim chief and co-founder Jack Dorsey would stay on as chief executive.
Earnings season picks up considerably next week with reports from General Electric, Netflix and JPMorgan Chase and other large banks.
Key economic reports include September US retail sales and the Fed's Beige Book report of economic conditions.