Wall Street Caps Dizzying Week With a 126-Point Rally


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The markets closed out the last trading day of the week with a relatively-modest rally in a session that bore little resemblance to the rollercoaster ride Wall Street took in the previous four days.

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Today's Markets

The Dow Jones Industrial Average rose 126 points, or 1.1%, to 11,269, the S&P 500 gained 6.2 points, or 0.53%, to 1,179 and the Nasdaq Composite rose 15.3 points, or 0.61%, to 2,508.

Despite massive selling two days this week, the broad S&P 500 index shed less than 2% as the market has made a strong comeback.  Meanwhile, the Nasdaq ended less than 1% lower.

With European worries fading to the background for the moment, Wall Street's focus once again turned to the economy.

A preliminary reading on consumer sentiment for August came in at a worse-than-expected 54.9, the lowest level since 1980, according to a survey by Thomson Reuters and the University of Michigan. Economists had been expecting a reading of 63 for the month.

"There is no question the sharp selloff in asset markets around the world over the past few weeks, on top of an already fragile economic picture, had a major influence on today's reading," wrote Peter Boockvar, managing director at Miller Tabak + Co., in a note to clients.

Retail sales climbed 0.5% in July, which was inline with estimates and the biggest gain since March.  Excluding automobiles, sales climbed 0.5%, which was  slightly better than forecasts of a gain of 0.2%.

"The consumer is at the center of the weak economy debate ... and as such, even a modestly better-than-expected number today provides us with some level of relief,"  Daniel Greenhaus, chief global strategist at BTIG, wrote in a note, referring to the closely-watched component that excludes automobile sales.

Retailers, such as Target (NYSE:TGT) and Best Buy (NYSE:BBY), can be particularly affected by these data, but it often has an impact on the broader markets.

Financials like JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) were among the laggards of the day, while industrials like Caterpillar (NYSE:CAT) helped push the markets higher.

Trading had been tumultuous in the last four trading sessions.  The Dow made 400-point gyrations higher and lower during every trading day this week besides Friday -- for the first time in history.  The Dow soared 423 points on Thursday, on the heels of a 520 points in violent trading where 100-point swings could happen in moments.

"The climate is fraught with risk," Peter Kenny, managing director at Knight Capital Group, wrote in a note, adding the instability has also created a slew of trading opportunities.

Wall Street paid close attention to headlines from Europe on Thursday, where media reports suggested certain large French banks may have capital issues.  However, the banks denied the rumors, and on Friday, France, Italy, Spain and Belgium restricted short selling on affected issues, in a bid to stem the losses.  The move sent European indicies soaring earlier in the session, and helped stock futures turn around, setting the stage for a U.S. rally.

Gold, which has seen massive buying amid the volatility in equities, was fairly tame on Friday.  The precious metal fell $8.90, or 0.51%, to $1,743 a troy ounce. In currencies, the euro gained 0.01% against the U.S. dollar, and the greenback slipped 0.13% against a basket of world currencies.

Energy futures were modestly lower on the day.  Light, sweet crude fell 34 cents, or 0.4%, to $85.38 a barrel.  Wholesale RBOB gasoline climbed 1 cent, or 0.18%, to $2.82 a gallon.

Consumer gasoline prices have moderated following a downshift in wholesale markets.  A gallon of regular costs $3.61 on average nationwide, down from $3.65 last month, but still well higher than the $2.78 drivers paid last year.

Foreign Markets

The English FTSE 100 jumped 3% to 5,320, the French CAC 40 rose 4% to 3,214 and the German DAX soared 3.5% to 5,998.

In Asia, the Japanese Nikkei 225 fell 0.2% to 8,963 and the Chinese Hang Seng edged higher by 0.13% to 19,620.

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