US and European stock markets staged a strong rebound Friday as investors went hunting for bargains following a free-fall Thursday on fears of spreading Middle East turbulence.
Oil prices meanwhile turned lower but were expected to remain high next week as markets continue to react to Israeli-Palestinian violence and fears of renewed attacks on US interests in the Gulf and elsewhere.
In New York traders brushed aside overseas political instability and signs of unexpectedly strong US growth, instead taking heart from a 35 percent third quarter profit gain at computer maker Gateway.
The Gateway report galvanized the high tech sector, enabling the Nasdaq electronic exchange to jump 7.87 percent, or 241.85 points, to 3,316.53. Sentiment also brightened at the New York Stock Exchange, where the Dow Jones Industrial Average finished the day at 10,192.18, points, up 157.60 points, or 1.57 percent, from Thursday's close.
The dollar meanwhile firmed against the euro and the Swiss franc as investors in an uncertain overseas political climate sought security in the US currency. The dollar was weaker against the Japanese yen, however.
Following a sharp surge in recent days in response to Middle East tension, oil prices settled lower Friday. But they remain volatile and not far off the 10-year highs last struck during the 1991 Gulf War.
A barrel of light sweet crude for November delivery sold for 34.99 dollars at close of trade Friday, down 1.07 dollars from Thursday. "The ongoing violence does not present an immediate supply problem," said George Berenek, an oil market analyst at Washington's Petroleum Finance Company.
"Nevertheless, there is a growing concern that the tension and violence between Israel and the Palestinians could escalate and even conceivably spread across the region."
US Energy Secretary Bill Richardson meanwhile foresaw no output cutbacks by oil producers because of current events Middle East tension and said he would seek a dialogue on energy prices during a trip next month to Saudi Arabia.
"We will continue to monitor the effect of the most recent events in the market," Richardson told reporters.
"We have no reason to believe that oil producers will cut their production or exports. Richardson is due to visit Riyadh next month for an oil industry conference, where he said he would be seeking "a positive dialogue" on the oil market.
Stock market traders on Friday shrugged off two government reports that could have been interpreted as pointing to higher interest rates from the Federal Reserve.
Consumers continued to spend vigorously in September, driving up retail sales by a much stronger than expected 0.9 percent, the sharpest increase since February. "The consumer is back buying big-ticket items and that indicates the economic slowdown may not be that great," said Joel Naroff, president of Naroff Economic Advisors.
While a spike in sales and the consequent possibility of higher interest rates usually dampens stock market sentiment, the latest data could actually boost a market that has recently been unsettled by profit warnings, according to First Union economist David Orr.
"The retail sales data argues instead for a 'soft' landing," he said, referring to an expected orderly moderation in US economic momentum from its previous torrid pace.
"It also supports the view that the earnings warnings are more shortfalls from overly optimistic expectations than signs of serious trouble in the economy."
In another report, the Labor Department said inflation at the wholesale level rose 0.9 percent in August, when the core rate in the producer price index, which excludes food and energy, was up 0.3 percent.
But according to Jerry Jasinowski, president of the National Association of Manufacturers, the numbers should be seen as "a spike in inflation rather than a general acceleration of inflation." "Outside of cars and trucks, there was no overall pattern of increase in the core rate." – (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)