Falling oil elevates stock indexes
Dow rises 197, leaving index down for week
NEW YORK — Wall Street capped a volatile week with sharp gains Friday as oil prices tumbled and after Federal Reserve Chairman Ben Bernanke said inflation pressures are likely to moderate. The Dow Jones industrial average rose nearly 200 points.
Speculation that Lehman Brothers Holdings could be sold helped buoy the financial sector and the overall market. Analysts warned this week that the investment bank could book large write-downs for bad debt. But reports Friday that Korea Development Bank is considering buying the company sent investors rushing for the stock. Lehman rose 69 cents, or 5 percent, to $14.41 but finished well off its highs of the session.
Investors also appeared cheered by an inflation forecast from Bernanke, who spoke at the Kansas City Fed’s annual economic symposium.
“Although we have seen improved functioning in some markets, the financial storm that reached gale force” around this time last year “has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment,” Bernanke warned, saying the inflation outlook remains “highly uncertain.”
Light, sweet crude plunged $6.59 to settle at $114.59 a barrel on the New York Mercantile Exchange, after surging by more than $5 a barrel Thursday.
The Dow rose 197.85, or 1.73 percent, to 11,628.06, near its highs of the session.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 14.48, or 1.13 percent, to 1,292.20, and the Nasdaq composite index rose 34.33, or 1.44 percent, to 2,414.71.
The run-up Friday left stocks with mostly modest losses for the week that again saw a series of triple-digit moves in the Dow. The Dow is down 0.27 percent, the S&P 500 is off 0.46 percent and the technology-heavy Nasdaq is down 1.54 percent.
Bond prices pulled back as investors rushed from the safety of government debt to stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.87 percent from 3.83 percent late Wednesday.
The dollar rose against other major currencies, while gold prices fell.
Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to a light 888.6 million shares compared with 912 million shares traded Thursday.
The Russell 2000 index of smaller companies rose 12.35, or 1.70 percent, to 737.60.
Overseas, Japan’s Nikkei stock average fell 0.68 percent. Britain’s FTSE 100 rose 2.52 percent, Germany’s DAX index rose 1.69 percent, and France’s CAC-40 advanced 2.23 percent.
