Another strong gain for stocks Friday extended to a fifth week in a row the market's recovery from a dismal start to the year.
The Standard and Poor's 500 index closed up for the year for the first time on Friday. The Dow Jones industrial average turned positive Thursday. Both had been down more than 10% for the year a little more than a month ago.
The Dow rose 120.81 points Friday, or 0.7%, to 17,602.30. It is up 1% for the year. The S&P 500 gained 8.99 points, or 0.4%, to 2,049.58, and is now up 0.3% for 2016. The Nasdaq composite picked up 20.6 points, or 0.4%, to 4,795.65, though the Nasdaq remains down 4% for the year.
Stocks had plunged early this year as investors feared that the Chinese economy, which has been the engine of global growth, was slowing faster than expected and that China's slide would be enough to pull the U.S. economy into recession.
“The market tended to focus on the negative and ignore the good” at the start of this year, said Lowell Yura, head of multi-asset solutions for BMO Global Asset Management.
But over the course of the five-week rally, reports on hiring, manufacturing and construction spending showed the U.S. economy is doing fairly well. Industrial, consumer and technology stocks benefited from the more positive outlook. Energy and materials stocks climbed as oil and precious metals prices rose.
And this week, the Federal Reserve said it expects to slow the pace of interest rate increases this year. Lower rates make stocks look more attractive to investors, and they help boost economic growth by reducing borrowing costs and reducing the risk associated with starting or expanding businesses.
The biggest gainers Friday were healthcare stocks and banks, the worst-performing parts of the market this year. Companies that make aircraft, machinery and chemicals also rose as the dollar fell against other currencies; investors hope the weaker dollar will boost those companies’ sales outside the U.S.
Starwood Hotels climbed $4.18, or 5.5%, to $80.57 after the hotel chain said it accepted a new buyout offer from a group led by Anbang Insurance Group of China. The bid is worth more than $14 billion. Competitor Marriott, which agreed to buy Starwood last year, said it is considering its options and noted it has the right to make another offer.
Columbia Pipeline Group climbed after TransCanada Corp. agreed to buy the company for $10 billion, or $25.50 per share, in an attempt to expand further into the U.S. Columbia Pipeline stock advanced $1.33, or 5.7%, to $24.84.
Healthcare stocks regained some ground after a rough week. Hospital operator Tenet Healthcare rose $1.57, or 5.9%, to $28.14, and prescription drug distributor McKesson gained $6.62, or 4.4%, to $158.31. Drug companies also ticked upward after days of losses, including Bristol-Myers Squibb, which rose $1.36, or 2.2%, to $62.83.
JPMorgan Chase said it will buy back $1.88 billion in stock, and Bank of America announced an $800 million stock repurchase. JPMorgan Chase stock rose $1.73, or 2.9%, to $60.48, and Bank of America shares picked up 39 cents, or 2.9%, to $13.79. Financial stocks also are getting a boost from the recovery in oil prices. As energy prices tumbled, investors worried that some bank loans to energy companies wouldn't get paid back.
Bond prices have also been rising in the wake of the Fed's announcement, and on Friday, the yield on the 10-year U.S. Treasury note slipped to 1.87% from 1.90%. The euro fell to $1.1268 from $1.1316. The dollar inched up to 111.60 yen after closing at 111.50 yen Thursday.
Oil prices turned lower Friday, though they remained sharply higher for the week. Benchmark U.S. crude fell 76 cents, or 1.9%, to $39.44 a barrel in New York. Brent crude, the benchmark for international oils, gave up 34 cents to close at $41.20 a barrel in London. On Thursday, U.S. crude closed over $40 per barrel for the first time since early December. The price of U.S. crude is up 50% since Feb. 11 on hopes that producers will cut output and relieve a global glut.
Metals prices declined after jumping Thursday. Gold fell $10.70 to $1,254.30 an ounce. Silver lost 22 cents, or 1.4%, to $15.81 an ounce. Copper slipped 1 cent to $2.28 a pound.
In other energy trading, wholesale gasoline fell 1 cent to $1.43 a gallon. Heating oil lost 2 cents to $1.24 a gallon. Natural gas gave up 3 cents to $1.91 per 1,000 cubic feet.
Stocks overseas were mixed. Germany's DAX rose 0.6% and France's CAC 40 gained 0.4%. Britain's FTSE 100 fell 0.2%. Japan's Nikkei 225 fell 1.2%, and Hong Kong's Hang Seng index rose 0.8%. The Shanghai Composite index in mainland China rose 1.7%.