Rally may continue this week if earnings pick up
Investors turn bullish on Fed's hints of delay in rate rise, recovery in commodity prices and positive China signals
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STOCKS rallied last week as worries about an imminent interest rate hike and outright busts in Chinese factories and Texas oilfields faded, and the gains could build this week, if third-quarter earnings pick up from an inauspicious beginning.
The Dow Jones Industrial Average and the Standard & Poor's 500 crossed the 17,000 level and the 2000 level respectively for the first time since August. Even more dramatic was the recovery in commodities prices and stocks. Oil futures topped US$50 a barrel for the first time since July. Glencore, the massive Swiss mining and trading company, which was forced to defend its solvency recently, rose by more than 20 per cent last week and has almost doubled in value since its September low.
The main reason stocks had one of their best weeks of the year was the growing sense that the Federal Reserve has cancelled plans for a 2015 rate hike. Shares rallied on Thursday after the Fed's minutes from its September meeting hinted the central bank will wait to see whether China's slowdown affects US exports, and for signs of inflation before it hikes rates.
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