Wall St ends six-day losing streak with a flourish

NEW YORK: U.S. stocks shed the sour tone that plagued equities all week on Friday, with a rally that broke a six-day losing streak.

Major indexes surged more than 1 percent, lifted by Chinese growth figures that eased concerns about a slowdown and earnings from JPMorgan Chase & Co that assuaged fears about the long-term impact of trading losses that cost the bank $5.8 billion for the year.

"The market was very oversold, so with China looking better than we previously thought, and JPMorgan looking like it has healed itself, things appear contained for the moment," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.

"We're putting in a bottom, not a top," he added.

Banking shares led the gains following results from JPMorgan and mortgage giant Wells Fargo & Co. JPMorgan was the Dow's top gainer, rising 6 percent to $36.07 while Wells Fargo rose 3.2 percent to $33.91.

Data showed growth in China slowed for a sixth straight quarter to 7.6 percent, but the result was better than some in the market had feared. It also kept open the possibility that more stimulus may be forthcoming from China's policymakers.

After the market fell every day this week until Friday, the gains lifted the S&P into positive territory for the week. Stocks also ended lower last Thursday and Friday.

With a full slate of corporate earnings next week, some investors believe the market may see more upside after the recent run of pessimistic earnings outlooks.

"The last time we saw this ratio of lowered expectations to raised ones, it proved a very good launching point for the market," said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab, which has $1.6 trillion in client assets.

Sonders said that for earnings expectations, "the bar has been set too low." Quarterly earnings growth is expected to be 5 percent, compared with estimates of 9.2 percent growth at the beginning of April, according to Thomson Reuters data.

Earnings next week include Intel Corp, Citigroup , Johnson & Johnson and Coca-Cola Co.

Financial stocks were the top gainers, with the S&P financial index up 2.4 percent and the KBW bank index up 2.6 percent.

Shares of Wells Fargo & Co rose 3.1 percent to $33.88 after the biggest U.S. mortgage lender reported second-quarter earnings that beat estimates on strong mortgage banking income and improved credit quality.

The Dow Jones industrial average was up 203.82 points, or 1.62 percent, at 12,777.09. The Standard & Poor's 500 Index was up 22.01 points, or 1.65 percent, at 1,356.77. The Nasdaq Composite Index was up 42.28 points, or 1.48 percent, at 2,908.47.

For the week, the S&P rose 0.2 percent and the Dow rose less than 0.1 percent. Both chalked up much steeper losses before Friday's rally. The Nasdaq fell 1 percent for the week, pressured by poor outlooks from technology companies.

The CBOE Volatility index, Wall Street's so-called fear gauge, fell 6.7 percent.

More than four-fifths of companies traded on the New York Stock Exchange closed higher while 71 percent of Nasdaq shares rose.

Volume was light, with about 5.40 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion. - Reuters