Stocks Continue Rally, End Best Week Since Nov.
The Dow Jones industrial average gained 53.92 points, or 0.75 percent, to end at 7,223.98. The Standard & Poor’s 500 Index rose 5.81 points, or 0.77 percent, to 756.55. The Nasdaq Composite Index added 5.40 points, or 0.38 percent, to 1,431.50.
Market optimism was boosted Friday by reports circulating that Citigroup’s chairman Richard Parsons said the bank won’t need additional government support after receiving three rounds of emergency funding.
Early this week, Citigroup said it was having its best quarter since 2007 and Bank of America Corp.’s chief executive Ken Lewis said his bank was profitable in January and February. General Motors Corp. said Thursday it won’t need an installment of bailout money, and General Electric Co.’s credit rating cut that day wasn’t as severe as some predictions.
Also Friday, a government report showed that the U.S. trade gap narrowed in January to its lowest level in six years, as the economic downturn continued to lower U.S. demand for products and oil. Imports fell faster than exports, slimming the trade deficit by 9.7 percent to $36 billion, the Commerce Department said. The deficit is the smallest it’s been since 2002.
But manufacturing demand throughout the world is slumping, and is on track to the biggest plunge in global trade in 80 years, reported Bloomberg News.
“It’s not a good report for U.S. manufacturing,” Julia Coronado, a senior U.S. economist at Barclays Capital Inc. in New York, which forecast the deficit would narrow to $35.5 billion, told Bloomberg. “This is certainly a sign that the global weakness is feeding into the domestic economy through the export channel.”
Other analysts are cautious about the positive market gains as well.
“We are going to remain cautious because the slightest bit of bad news could turn this thing around,” Joe Arnold, investment adviser at Dawson Wealth Management, told the Associated Press.
A Reuters/University of Michigan’s preliminary report on the consumer sentiment index for March released Friday revealed that consumer confidence is holding at a 28-year low this month. High unemployment rates and a deepening recession kept the number low, while President Obama’s economic moves have yet to cause a boost in sustained confidence.
“Historically, readings at this level suggest a great deal of distress,” said Christopher Low, chief economist at FTN Financial in New York, in an interview with Bloomberg Television. “Things are very, very fragile, especially for consumers. Now we sit back and wait for the stimulus to kick in.”
Also Friday, oil dropped toward $46 a barrel, as bearish demand forecasts outweighed the potential for OPEC agreeing to further production cuts at its weekend meeting.
An OPEC report released Friday showed world oil demand contracting faster than expected, and the International Energy Agency lowered its oil demand forecast for 2009.
“Crude prices are down as demand is not too good, as borne out by the IEA forecast. Trading has been sporadic, up and down, as there appears to be no consensus at this point on what OPEC will do (this weekend),” Kyle Cooper, director of research at IAF Advisors in Houston, told Reuters.
OPEC meets Sunday in Vienna to discuss moves to deal with falling oil prices.
U.S. President Barack Obama telephoned King Abdullah of Saudi Arabia, the OPEC kingpin, Friday ahead of the meeting. Energy Secretary Steven Chu said Wednesday that he planned to tell OPEC ministers that higher oil prices will slow the recovery of the world economy.