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Monday, October 24, 2016

By Caroline Valetkevitch

(Reuters) — U.S. stocks rose on Friday and the S&P 500 posted its biggest weekly gain since July as investors weighed whether the Federal Reserve will raise interest rates next week.

Energy shares dropped after Goldman Sachs cut its oil price forecast through next year.

Eight of the 10 S&P 500 sectors closed higher, led by gains in utilities (SPLRCU), which tend to rise as bond yields fall. The index ended up 0.8 percent, while 10-year note yields dipped.

Investors are awaiting next week’s Federal Reserve meeting and news on whether it will raise rates for the first time in almost a decade.

“It’s really Fed watch. That’s what traders are waiting for,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

“There’s speculation the Fed might hold off, and if they do, I think we’ll see stocks rally. But to us, it’s not a question of if the Fed raises rates but when. It’s going to happen.”

The Dow Jones industrial average (DJI) rose 102.69 points, or 0.63 percent, to 16,433.09, the S&P 500 (SPX) gained 8.76 points, or 0.45 percent, to 1,961.05 and the Nasdaq Composite (IXIC) added 26.09 points, or 0.54 percent, to 4,822.34.

For the week, the Dow was up 2.1 percent, the S&P was up 2.1 percent and the Nasdaq was up 3.0 percent.

The Fed has said it will raise rates when it sees a sustained economic recovery, especially in the job market.

The day’s data signaled moderate economic growth and tame inflation. U.S. consumer sentiment dropped to its lowest level in a year in early September, while producer prices for August were flat.

Oil prices fell after the Goldman forecast, which cited oversupply and concerns over China’s economy. Goldman said crude oil could fall as low as $20 a barrel. ConocoPhillips (COP.N), down 2.2 percent at $47.36, was the biggest drag on the S&P 500.

Stocks have been volatile since China devalued its currency in August amid concerns of sputtering growth in the world’s second-largest economy. The S&P 500 has had moves of at least 1 percent in 11 sessions since Aug. 20.

(Editing by Nick Zieminski)

Photo: Traders work on the floor of the New York Stock Exchange September 11, 2015. REUTERS/Brendan McDermid

  • Lynda Groom

    Just a couple of weeks ago some of the GOP candidates blamed the sudden fall of stock upon the policies of the Obama administration. I’m waiting to hear back from them giving the administration credit for the hike in stocks. Yeah right, like that will ever happen.

    • Dominick Vila

      The good side of their rhetoric is that if President Obama’s policies are responsible for the DOW Index dropping from an all-time record high of 18,000 points to 16,000 points; those policies are also responsible for the DOW going from 3,000 points when President Obama was inaugurated in January 2009 to the highest level in U.S. history.
      Don’t forget that only the most ignorant, or desperate, Republicans continue to bring up the economy and job creation as part of their electioneering strategy. The focus on nuclear agreements, illegal immigration, abortion, and same sex marriage is not an accident. Talking about the economy is poison for Republican orthodoxy.

  • Dominick Vila

    The sudden drop in the DOW Index is due, in part, to a long overdue adjustment; China’s economic woes, which are already impacting the commodities market; and the fact that the Fed will eventually have to raise interest rates.
    If the Fed delays raising interest rates the market will take off again, and the DOW will go back to its all time record of 18,000 points. If the Fed raises the interest rate now, the market will nose dive for a few weeks, and will bounce back up within a month or so.