NEW YORK – A burst of buying Friday in U.S. stocks defied slumps in other markets and offered hope for investors shaken by geopolitical turmoil. Major U.S. stock indexes closed up around 1 percent, buoyed by signs that tensions in Ukraine might be easing.
The rally on Wall Street contrasted with price declines in European and Asian stock markets. Fear has been creeping into stock and bond markets around the world in recent weeks against a backdrop of escalating global conflicts.
News Friday of U.S. fighter jets dropping bombs in Iraq and the end of a three-day cease-fire in Gaza weighed further on European markets. Asian markets also had a bad week, including a 5 percent drop in Japan’s benchmark stock index.
As anxieties have risen in recent days, money has been flowing from around the world into U.S. Treasurys, the perennial safe haven for spooked investors.
U.S. stock markets bucked the trend Friday as investors snapped up shares that had been beaten down in recent days. The buying surged late in the day on reports that Russia had ended military exercises near Ukraine. The Dow Jones industrial average surged 1.1 percent, its biggest gain since March. The index remains 3.4 percent below its record high set July 16.
Jim Paulsen, chief investment strategist at Wells Capital Management, said he wasn’t surprised by the Wall Street rally.
“The U.S. economy will grow at 3 percent or 4 percent for the rest of the year,” Paulsen said. “Are geopolitical risks really going to have an economic impact?”
This week, the head of the European Central Bank, Mario Draghi, warned that the crisis in Ukraine could hurt the fragile recovery in the region.
The troubles in Iraq also threaten oil supplies. A report from Citigroup to clients early Friday noted that Iraq is the fastest-growing supplier among OPEC members.
Benchmark U.S. crude oil rose 31 cents to close at $97.65 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 42 cents to close at $105.02 on the ICE Futures exchange in London.
The Citi report also noted, though, that there was reason to keep buying stocks, not the least of which is strong corporate earnings.
With nearly all second-quarter results for S&P 500 companies out, analysts are calling for earnings in that index to jump 10 percent from a year earlier.
On Friday, the Dow ended up 185.66 points, or 1.1 percent, to 16,553.93. The Standard & Poor’s 500 index rose 22.02 points, or 1.2 percent, to 1,931.59. The Nasdaq composite rose 35.93 points, or 0.83 percent, to 4,370.90.
In economic news, the U.S. Labor Department reported worker productivity increased 2.5 percent at a seasonally adjusted annual rate, after plummeting 4.5 percent in the first quarter.
In Europe, Germany’s DAX fell 0.3 percent while the FTSE 100 index of British shares dropped 0.5 percent. Both indexes are down about 2 percent for the week, capping three weeks of losses.
France’s CAC-40 was flat, but ended the week down 1.3 percent. That was its third straight weekly loss.
The yield on the 10-year Treasury note edged up to 2.42 percent from 2.41 percent late Thursday.