Dow Jones Industrial Average Rises Amid A Global Rally Fueled By Higher Oil Prices, Optimism Over Further Stimulus

This story was updated at 4:15 p.m. EST.

U.S. stocks ended Friday by recovering from a steep mid-week sell-off, with the Dow Jones Industrial Average gaining more than 200 points and the Standard & Poor's 500 settling above 1,900 for the first time in six trading sessions. Both indexes are still down by around 7 percent so far this year.

Globally, equities rallied Friday as oil prices spiked more than 9 percent in a dramatic rebound from Wednesday’s plunge. Investor confidence rose on indications central banks would act to support markets. In Europe, shares had their biggest two-day gain in more than four years after European Central Bank President Mario Draghi reiterated at the World Economic Forum in Davos, Switzerland, on Friday the ECB was determined to reach its inflation target.

The Dow (INDEXDJX:.DJI) closed up 210.83 points, or 1.33 percent, to 16,093.51. The broader S&P 500 index (INDEXSP:.INX ) gained 37.91 points, or 2.03 percent, to 1,906.90. The Nasdaq composite (INDEXNASDAQ:.IXIC) rose 119.12 points, or 2.66 percent, to 4,591.18.

Oil prices continued a rally that started on Thursday after shedding about 20 percent of their value since the start of the month. U.S. West Texas Intermediate crude advanced 8.36 percent to $32.00 per barrel for March delivery on the New York Mercantile Exchange. Brent crude, the other major global benchmark, jumped 9.16 percent to $31.93 for March delivery on the London ICE Futures Exchange.

Asian stocks rebounded by the highest rate in nearly four months on indications the Bank of Japan would enlarge its economic stimulus program while China indicated it had no intention of devaluing its yuan, a move that would disrupt global markets.

"I think China has been acting a little more sensibly. They've been more rational. They've been more consistent. I think that's really stabilized the market," Chairman and CEO of BlackRock Larry Fink, told CNBC's "Squawk Box" at the World Economic Forum in Davos, Switzerland. But the boss of the world’s largest asset manager added, "In some sectors, we're going to have more pain. We're not over yet. We still haven't found the bottom in oil prices yet.”

All 10 S&P 500 sectors closed up, with the biggest gains in energy and information technology stocks. Industrials, which include airlines and construction equipment makers, dipped slightly into negative before rebounding by the closing bell. Apple Inc. (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT) led Dow 30 gains. Leading declines: American Express Co. (NYSE:AXP) and General Electric Co. (NYSE:GE), which both reported weaknesses in their fourth quarter earnings reports disclosed Friday morning.

The yield on the benchmark U.S. 10-year Treasury yield was up to 2.05 percent after falling to its lowest level since October earlier in the week. The bond yield typically rises when investors are more confident about the markets and falls when concerns flare. Gold, another so-called safe harbor investment, edged down a slight 0.04 percent $1,097.80 per ounce. Gold prices tend to fall as confidence in the markets rise.

In other U.S. economic news, The National Association of Realtors said on Friday that existing-home sales rose in December by a record 14.7 percent to an annual rate of 5.46 million units, rebounding from a 19-month low in November. Sales jumped 6.5 percent in 2015, the strongest pace since 2006. The news helped boost investor confidence Friday morning.

Global Markets

Major global stock market indexes were in green territory in the final trading session of the week.

China’s stocks eked out gains by the closing bell on low trading volume as investors there backed away from fickle mainland equities. Stocks in China are under pressure as corporate debt mounts and concerns rise that China could devalue the yuan, further reducing China’s currency reserves.

China’s broad CSI 300 Index gained 1.01 percent while the mainland Shanghai Composite Index rose 1.25 percent. The smaller Shenzhen Composite rose 1.46 percent by the closing bell.

Outside of China, investors were more upbeat about the prospects of Japan’s central bank further expanding its asset-purchase program (when central banks buy assets to free up lending and introduce more currency into the markets) implemented last year. The Bank of Japan meets on Jan. 28-29 to tackle issues like low inflation, a strengthening yen and low wage growth. Hong Kong’s Hang Seng gained 2.90 percent while Japan’s Nikkei 225 leaped 5.88 percent. The dollar strengthened against the yen in response.

European shares also rallied on similar grounds. The European Central Bank could expand its asset-buying program after its meeting in March, giving investors more confidence that the euro-area could see rising prices later this year. The broad Stoxx Europe 600 index advanced 3.15 percent by the end of trading on Friday. The Paris-based CAC 40 closed up 3.10 percent, while London’s FTSE rose 2.19 percent. Frankfurt’s DAX gained 1.99 percent.

Market Movers

Fourth quarter 2015 earnings season is well underway. Next week will see major tech and consumer products manufacturers offering insight into how their sectors performed in the last three months of 2015, and what the companies expect this year.

American Express shares plunged more than 12 percent Friday after the company said fourth-quarter earnings tumbled 38 percent, to 89 cents per share. That was well below the forecast of $1.13.

General Electric shares closed down 1.2 percent after the maker of turbines and oil and gas equipment said industrial profits fell 8 percent in the last three months of 2015.

Shares in the country’s top drugstore chains CVS Health Corp. (NYSE:CVS) and rival Walgreens Boots Alliance Inc. (NASDAQ:WBA) rose after investment advisor Baird began coverage of the companies with an “outperform” rating.

Stock in aircraft electronics maker Rockwell Collins Inc. (NYSE:COL) dropped after it reported a miss in revenue for its fiscal first quarter and despite raising its full-year outlook.