Dow rises 2% as oil prices, bank shares rally

Traders work on the floor of the New York Stock Exchange on Feb 12, 2016 in New York City.
Traders work on the floor of the New York Stock Exchange on Feb 12, 2016 in New York City.PHOTO: AFP

NEW YORK (AFP) - US stocks jumped Friday with beaten-down banking shares powering higher after a solid US retail sales report and a big rise in oil prices.

The Dow Jones Industrial Average surged 313.66 points (2 per cent) to 15,973.84.

The broad-based S&P 500 climbed 35.70 (1.95 per cent) to 1,864.78, while the tech-rich Nasdaq Composite Index gained 70.67 (1.66 per cent) at 4,337.51.

Banks were the hottest sector, reversing ugly declines earlier in the week. Citigroup advanced 7.3 per cent, JPMorgan Chase 8.3 per cent and Bank of America 7.1 per cent.

The sector was supported by news that JPMorgan chief executive Jamie Dimon spent US$26 million (S$36 million) of his own money to purchase JPMorgan shares and comments from New York Federal Reserve chair William Dudley that expressed confidence in the US banking system’s ability to withstand economic duress.

Retail sales in the United States rose 0.2 per cent in January, and December’s drop was revised upward to a 0.2 per cent gain, government data showed.

Investors were also cheered by a 12.3 per cent rise in US oil prices to US$29.44 a barrel.

“Today, it is a bounce-back in oil prices, combined with better-than-expected retail sales, and the belief that we’ve gone down too far for too long and needed at least a countertrend breather,” said Sam Stovall, chief investment officer at S&P Capital IQ.

Petroleum-linked shares advanced, with Dow member Chevron rising 2.9 per cent, Apache 6.3 per cent and oil-services company Weatherford International 6.8 per cent.

Videogame developer Activision Blizzard tumbled 7.9 per cent after reporting fourth-quarter net income fell 56 per cent to US$159 million, missing expectations.

Pandora Media plummeted 12 per cent after reporting fourth-quarter net income of US$12.7 million, up from a loss of US$19.5 million in the year-ago period. Analysts said the company’s user growth figures were not strong enough given rising competition from Spotify and Apple Music.

Square surged 7.9 per cent on news that credit-card giant Visa holds a 1 per cent stake in the online payment company. Dow member Visa rose 2.9 per cent.