US stocks rose more than 2% on Friday after the Bank of Japan adopted a negative interest rate policy for the first time to stimulate the Japanese economy.
Upbeat earnings reports and an encouraging Chicago PMI report also helped push U.S. stocks higher.
At 3:37 p.m. in New York, the Dow Jones Industrial Average (INDEXDJX:.DJI) rose 2.2% to 16,415. The S&P 500 (INDEXSP:.INX) rose 2.2% as well to 1,934. The Nasdaq Composite (INDEXNASDAQ:.IXIC) was up 2% at 4,597.
The major U.S. indexes stretched their rally after the Chicago PMI showed 55.6 in January, beating expectations of a 45.0 print and above December's 42.9 read.
Stocks in the U.S., Asia and Europe rose after the Bank of Japan's surprise announcement. European stocks ended more than 1 percent higher.
U.S. crude oil futures settled up 1.2% at $33.62 a barrel, for its first four-day winning run since April.
Still, U.S. stocks are on track to end January down about 6%, their worst month since August, as investors retreated from stocks and flooded into haven assets such as bonds and gold.
MID-SESSION
Wall Street surged on Friday as global stocks leaped following an unexpected decision by the Bank of Japan to cut a benchmark rate below zero in another bold move to stimulate the Japanese economy.
At 1:02 p.m. in New York, the Dow Jones Industrial Average advanced 1.8% to 16,350. The S&P 500 gained 1.7% to 1,924, while the Nasdaq Composite increased 1.5% to 4,572.
While many investors had anticipated an expansion of the bank’s asset-purchase program this year, few expected Japan to join the European Central Bank and the central banks of Sweden, Denmark and Switzerland in negative territory on Friday.
Microsoft (NASDAQ:MSFT) rose 5.4% to $54.90 after the world’s largest software maker beat on both the top and bottom line, helped by improvement in its cloud services business as well as cost-cutting.
Amazon.com (NASDAQ:AMZN) sank 7.7% to $586.83 after the e-commerce pioneer posted quarterly profit substantially below expectations.
Facebook (NASDAQ:FB) extended Thursday's stellar gains to hit a record intraday high of $112.84.
Oil prices retreated from their push toward a three-week high. Oil has gone up and down all morning. Light, sweet crude for March delivery recently traded up 10 cents, or 0.3%, to $33.32 a barrel on the New York Mercantile Exchange.
OPEN
US equity markets advanced by around one percentage point on Friday with heavyweights like Microsoft (NASDAQ: MSFT) gaining more than than 4.5% on news the IT behemoth showed off gains against Amazon (NASDAQ:AMZN) in cloud computing.
The Dow Jones Industrial Index rose 1.25% to 16,275. The S&P 500 advanced 1.14% to 1,915. The Nasdaq Composite marched 1.03% higher to 4,553. Microsoft shares were last seen up 2.31% at US$54.36. But bucking the trend online retailer Amazon (NASDAQ: AMZN) was down over 8% on disappointment with its holiday season sales. In brisk business, its shares traded down $52.99 at US$582.37. In other gainers, also with a tech theme, Visa (NYSE:V) advanced 4.7% to US$72.61 after the payments technology company’s results late Thursday roughly matched expectations. MasterCard (NYSE:MA) spiked 4.7% to US$87.38, reversing an earlier loss. The card network giant reported its fourth-quarter earnings beat expectations but revenue missed. Whirlpool (NYSE:WHR) climbed 3.8% to US$136.96 after the appliances manufacturer’s earnings came in above expectations. The gains were made as GDP figures for the fourth quarter in the US came in line with econmists' expectations. Gross domestic product grew at a 0.7% annual rate, following a 2% rise in the third quarter. The economy grew 2.4 percent in 2015 after a similar expansion in 2014.
PREVIEW
In keeping with global markets today, shares on Wall Street are poised to continue higher on the last trading day of the month.
It comes after strong trading in Asia overnight, where the Nikkei 225 closed 477 points higher and the Shanghai Composite index added 82 points. Driving sentiment was a surprise move by Japan's central bank to introduce an interest rate of minus 0.1% and could go lower if needed.
The idea is the economy will be boosted as people seek to spend and borrow more.
Yesterday, US shares finished higher as traders welcomed a surge in oil prices and good numbers from social media giant Facebook (NASDAQ:FB).
The Dow Jones closed 126 points up at 16,070, the Nasdaq gained 39 at 4,507 and the S&P500 added ten points to stand at 1,893.
Today, the momentum is set to continue, with Dow Jones futures up a strong 107 points, Nasdaq futures up almost 30 and the S&P500 gaining 13.
In London, FTSE100 is up at the time of writing 51 points.
Chris Beauchamp, at spreadbetter IG index, said :"The statements from the European Central Bank, the Federal Reserve and the BoJ have not been quite like the great actions of old, when the merest utterance could send markets flying higher, but they have been enough to enable stock markets to add to gains as the recovery off the January lows goes on."
The big corporate story of the day is online retailer Amazon (NASDAQ:AMZN), whose shares are down over 10% in pre-market deals as fourth quarter profit was well down on expectations.