Optimism About Ukraine Leads To Rally On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Friday, partly offsetting the steep losses posted over the past few sessions. The markets benefited from bargain hunting as well as easing concerns about the situation in Ukraine.

The major averages ended the day firmly in positive territory, just off their highs for the session. The Dow jumped 185.66 points or 1.1 percent to 16,553.93, the Nasdaq advanced 35.93 points or 0.8 percent to 4,370.90 and the S&P 500 surged up 22.02 points or 1.2 percent to 1,931.59.

With the strong gains on the day, the major averages all moved to the upside for the week. The S&P 500 edged up by 0.3 percent, while the Dow and the Nasdaq both rose by 0.4 percent.

The rally on Wall Street was partly due to optimism about a potential de-escalation of the crisis in eastern Ukraine following comments from Nikolai Patrushev, Secretary of the Russian Security Council.

Patrushev told Russian news agency RIA Novosti that Russia is ready to mediate talks between the Ukrainian government and pro-Russian separatists.

"We are interested in peace in Ukraine and in bringing the sides to the negotiating table so that they could settle their disputes," Patrushev told RIA in an interview. "Russia will continue to make every effort for the soonest de-escalation of tensions."

He added, "As for mediation, of course, we are ready to assist in the process of the discussion and we have said so on numerous occasions."

Additional buying interest was seen following a report from Interfax indicating that Russia has halted its military exercises near the Ukrainian border.

The upbeat news out of Russia helped offset concerns generated by news that President Barack Obama authorized U.S. airstrikes against Islamic militants in northern Iraq.

In a brief nationally televised speech Thursday evening, Obama said that U.S. action - taken at the request of the Iraqi government - will also include what he called humanitarian relief in the face of potential genocide.

Obama stressed that American combat troops will not be returning to fight in Iraq, providing some confidence that U.S. involvement will be limited.

Meanwhile, traders largely shrugged off a report from Labor Department showing that labor productivity increased by more than anticipated in the second quarter.

Sector News

Continuing to recover from a recent sell-off, utilities stocks moved sharply higher over the course of the trading session. The Dow Jones Utilities Average surged up by 2.2 percent, climbing further off Wednesday's four-month closing low.

Williams (WMB) and Dominion Resources (D) turned in two of the utilities sector's best performances, jumping by 3.5 percent and 3.2 percent, respectively.

Natural gas stocks also showed a substantial move to the upside on the day, driving the NYSE Arca Natural Gas Index up by 2.2 percent. The strength in the sector came as natural gas for September delivery climbed $0.086 or 2.2 percent to $3.962 per million BTUs.

Significant strength was also visible among housing stocks, as reflected by the 1.8 percent gain posted by the Philadelphia Housing Sector Index. With the gain, the index climbed further off the seven-month closing low that it set last week.

Defense, retail, oil, and airline stocks also saw considerable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plunged by 3 percent, while Hong Kong's Hang Seng Index dipped by 0.3 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index fell by 0.3 percent and 0.5 percent, respectively.

In the bond market, treasuries pulled back off their best levels of the day but still closed slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by almost a basis point to 2.415 percent.

Looking Ahead

Developments overseas are likely to remain in focus in the early part of next week amid the absence of any major U.S. economic reports.

Economic data is likely to attract increased attention as the week progresses, however, with traders likely to keep an eye on reports on retail sales, producer prices, and industrial production.

While earnings season is winding down, trading could also be impacted by the release of quarterly results from big-name companies such as Wal-Mart (WMT) and Cisco (CSCO).