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While you were sleeping: UPDATED Dow turns positive for first time this year

Wall Street has recovered all its losses for 2016.

Margreet Dietz
Fri, 18 Mar 2016

The Dow Jones Industrial Average turned positive for the first time this year and US crude oil settled above $US40 a barrel as markets continued to rebound after a rough start to 2016.

Concerns early this year about slowing global growth and the path of interest rates have eased in recent weeks, as commodity prices stabilise and the US economy show signs of improvement.

The Dow industrials and S&P 500 are near where they ended 2015, after both had fallen more than 10% by February 11.

This follows Wednesday's flagging by the US Federal Reserve that fewer interest rate increases ahead this year than previously thought.

During the latest two-day Federal Open Market Committee meeting, policymakers lowered their expectations for rate increases this year.

The median projection of 17 Fed officials is for the fed funds rate to rise to 0.875% by the end of 2016.

"You have seen a shift this time, in most participants' assessments of the appropriate path for policy," Fed chairwoman Janet Yellen said at a press conference on Wednesday, according to Bloomberg.

"That largely reflects a somewhat slower projected path for global growth, for growth in the global economy outside the US, and for some tightening in credit conditions in the form of an increase in spreads."

The US dollar weakened on the prospect of fewer US rate hikes, bolstering the appeal of commodities including oil, gold and copper, which are denominated in the currency. That also helped boost the appeal of mining stocks.

"With loose monetary policy and low rates, we'll have a lot of money out there in the system and demand will be higher," Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, told Bloomberg.

"The miners are benefiting from this because the trends on the physicals do look to be higher, whether it be gold, platinum, silver, copper or any of the other base metals for that matter."

Dow rises 156 points
On Wall Street, the Dow industrials rose 155.73 points, or 0.9%, to 17,481.49 – a gain of 0.3% so far this year. The S&P 500 climbed 0.7% to 20040.59 and briefly touched positive territory for the year before slipping back.

The Nasdaq Composite rose 0.2% to 4774.99 but is still down 4.6% so far this year.

Advances in shares of General Electric and those of Boeing, up 2.8% and 2.2% respectively, led the gains in the Dow.

Shares of FedEx soared, up 11.8%, after the company upgraded its the lower end of its profit outlook range. It now predicts profit of $US10.70 to $US10.90 a share for the year ending in May, compared with a previous forecast of $US10.40 to $US10.90.

"We now expect our fiscal 2016 adjusted earnings to be up 20% to 22% over last year, as we continue to benefit from our execution of the profit improvement program," Alan Graf, FedEx's chief financial officer, said in a statement.

"Our positive financial momentum should continue into our upcoming fiscal 2017, where we expect solid growth in earnings and cash flow."

Shares of Office Depot jumped 7.1% after the New York Post reported that Amazon might be eyeing a stake in the company's corporate business unit.

US crude oil futures rose 4.5% to $US40.20 a barrel – the highest settlement since December 3 – as the dollar weakened and major oil producers suggested an increasing willingness to freeze output.

Energy stocks were among the biggest gainers in the S&P 500, rising 1.4%.

Economic data shows strength
A Labor Department report showed that initial jobless claims climbed 7000 to a seasonally adjusted 265,000 for the week ended March 12, remaining below 300,000 for 54 weeks, the longest stretch since 1973.

"The labour market is tight as a drum," Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters.

"If we continue to receive strong reports like this, then the Fed is going to have to put a June rate hike on the table."

Traders bet that the odds for a June rate hike were at 37%, compared with about 54% before the Fed's statement and outlook, according to Bloomberg.

The Fed Bank of Philadelphia's index for manufacturing in the mid-Atlantic region rallied to 12.4 in March, the first positive reading in seven months, while the Conference Board's leading economic index rose 0.1% in February, following a 0.2% drop in January.

A Commerce Department report showed the current account deficit narrowed in the fourth quarter, falling 3.6% to US$125.3 billion.

In Europe, the Stoxx 600 Index ended the day with a decline of 0.2% from the previous close. Germany's DAX Index dropped 1.1%, while France's CAC 40 Index fell 0.7%. The UK's FTSE 100 Index rose 0.2%.

(BusinessDesk)

Margreet Dietz
Fri, 18 Mar 2016
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While you were sleeping: UPDATED Dow turns positive for first time this year
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