Dow Snaps Losing Streak
Stocks rallied to close sharply higher Friday, ending a string of four losing sessions, after Brazil stopped propping up its embattled currency and restored some confidence in anxious world markets.
The Dow Jones industrial average rose 219.62 points, or 2.41 percent, to close at 9,340.55, recovering much of this week's loss of nearly 300 points.
In the broader market, declining issues beat advances by a 21-to-8 margin on active volume of about 796 million shares on the New York Stock Exchange. The Nasdaq composite index jumped 71.39 points, or 3.14 percent, to 2,348.21.
Recent economic troubles in Brazil have raised fears among investors that profits of U.S. companies operating in Latin America could suffer.
But Wall Street was pleased with Brazil's decision Friday to stop spending heavily to prop up its battered currency, the real. The move is seen as a way for Brazil to attract foreign investment and hold on to its currency reserves.
The Brazilian currency fell nearly 15 percent against the U.S. dollar. But the main stock market in Sao Paolo, Latin America's largest exchange, soared more than 33 percent Friday, after plunging the last six sessions.
Brazil is the biggest and most important economy in Latin America, which accounts for 20 percent of U.S. exports. Investors worry that its problems will spread throughout the region, specifically to Mexico.
"I do think there's recognition that it isn't quite as bad as Asia, that it doesn't necessarily have to reverberate around the globe," said Peter Anderson, chief investment strategist at American Express Financial Advisors.
"We survived Asia very well, because the Federal Reserve reduced interest rates, and in fact that's what pulled the market up in the final quarter of last year," he said. "I think people increasingly recognize that these kinds of dilemmas, as long as they don't spread, can actually be constructive."
The gains in U.S. trading helped lift European stocks from midday losses. Germany's DAX index closed up 1.4 percent, Britain's FT-SE 100 rose 2.1 percent, and France's CAC-40 gained 1.4 percent.
In overnight trading, Asian stock markets were mostly higher. Tokyo's stock market was closed for a holiday.
Leading the gains on Wall Street were financial services stocks, which had taken big hits earlier this week on Brazil's devaluation. Basic materials stocks, like those of paper and chemical companies, were higher. Consumer stocks were mixed after taking big hits earlier this week on Brazil.
Volume on the New York Stock Exchange was moderate ahead of a three-day weekend. The market is closed Monday for the Martin Luther King holiday.