US stocks advanced on Friday as Federal Reserve chair Janet Yellen reassured investors that US economic growth is sturdy enough to withstand turmoil in emerging markets.
Nike led the early rally, jumping 9.1 per cent to a record after better-than-forecast earnings and future orders, including in emerging markets.
Citigroup and Bank of America gained more than 2.4 per cent as financial companies rose with bond yields.
The Standard and Poor’s 500 Index climbed 0.8 per cent to 1,947.51 in early afternoon trading after closing on Thursday at an almost three-week low.
The Dow Jones Industrial Average gained 196.56 points, or 1.2 per cent, to 16,397.88.
The Nasdaq Composite Index added 0.6 per cent.
“You had a rally starting mid-day yesterday, and last night Yellen provided more clarity from what we had a week ago,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
“The fact that the market had sold off five of the last six days meant a lot of negativity was priced in short-term, and the whiff of anything positive was going to push the market higher. We were due to go up on something today.”
Speaking after markets closed on Thursday, Ms Yellen said the central bank is on course to raise interest rates this year, although she acknowledged that economic “surprises” could lead them to change that plan.
The Fed held its fire on a rate increase last week, saying it’s considering spillover risks to the US economy from turmoil in global markets. That sparked declines in US equities in five out of six sessions leading up to Ms Yellen’s speech.
- Bloomberg
