U.S. financial markets surged in early trading Friday as investors cheered a surprise interest rate cut in China and a hint of further stimulus for Europe from the head of the region's central bank. The rally extended gains from a day before, pushing the major market indexes further into record territory.
KEEPING SCORE: The Standard & Poor's 500 index gained 17 points, or 0.9 percent, to 2,070 as of 10:02 a.m. on Wall Street. The Dow Jones industrial average rose 159 points, or 0.9 percent, to 17,878. The Nasdaq composite added 33 points, or 0.7 percent, to 4,735.
SECTOR VIEW: Nine of the 10 sectors in the S&P 500 index rose, with materials stocks climbing the most. Ross Stores led the gainers, adding $5.35, or 6.4 percent, to $88.50. Telecommunications stocks declined.
CHINA RATE CUT: China's central bank cut the interest rate on its one-year loans to financial institutions by 0.4 percentage point to 5.6 percent. The surprise reduction comes in the wake of recent figures showing that the country's annual growth rate slowed to a five-year low of 7.3 percent last quarter. Many analysts think a key motivation behind the rate cut is the recent steep decline in the value of the Japanese yen, which is likely to impact on China's exports.
DRAGHI ALSO MOVES MARKETS: European Central Bank president Mario Draghi also caused a stir in markets when he told a conference in Frankfurt, Germany, that the bank is willing to "step up the pressure" and increase its efforts to stimulate the struggling economy. The comments fed market expectations for more stimulus, sending the euro lower and stocks higher. If current efforts do not achieve the desired effect, Draghi said the ECB could "broaden even more the channels through which we intervene." For many in the markets, that's a clear hint that the bank could soon starting buying government bonds.
OVERSEAS MARKETS: In Europe, Germany's DAX jumped 2.4 percent, while the CAC-40 in France rose 2.6 percent. The FTSE 100 index of leading British shares rose 1.3 percent. In Asian markets, Japan's Nikkei 225 rose 0.3 percent, while Hong Kong's Hang Seng rose 0.4 percent. Seoul's Kospi added 0.3 percent.
ENERGY: The price of crude oil rose after the Chinese rate cut and stimulus talk out of Europe. Benchmark U.S. crude rose 78 cents to $76.63 a barrel in New York.
BONDS: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.32 percent from 2.34 percent late Thursday.