2:30 PM New York City, New York – Stocks on Wall Street shot up after six days of losses and crude oil futures soared more than 10%. Market indexes in New York surged as much as 4% before trimming losses and European indexes closed up at least 3%. Emerging market currencies rebounded from the recent lows in Asia.
Stocks on Wall Street soared after economic growth was revised higher for the second quarter and global markets appeared to return to some sense of normality.
S&P 500 index soared 2% or 39.53 to 1,980.20 and the Nasdaq Composite index added 1.9% or 90.46 to 4,788.45.
The annual pace of GDP growth was revised higher to 3.7% from the previous estimate of 2.3%, largely on the higher level of inventories than previously estimated.
Still, doubts persists that the latest U.S. economic data may not reflect patchiness in the economy and several industries are struggling.
The latest estimate increase was largely driven by the increase in inventories which is going to weigh on growth in the third quarter. In addition, the private domestic demand that excludes international trade and inventories was estimated to increase at 3.3% rate from the previous estimate of 2.5% rate.
Business spending in the second quarter was not as weak as previously estimated and estimate of residential construction activities was also lifted.
Weakness in the energy sector was one of the two dark spots in the otherwise rosy picture painted by the latest report.
Mining exploration and energy drilling spending plunged 68.3% rate in the quarter, the largest quarterly decline since the second quarter of 1986.
The GDP report also showed that the trade deficit in the quarter was smaller than previously estimated, contributing 0.23 percentage point to the GDP growth.
Separate data on jobless claims also contributed to the brightening economic backdrop.
The U.S. Labor Department said initial claims of jobless benefits declined 6,000 to a seasonally adjusted 271,000 in the week ending on Aug 22.
Brent Crude oil in London trading jumped more than 10% and latest month delivery futures of oil jumped $4.15 to $47.25 and in New York soared 11% to $42.58 a barrel.
In overseas trading, European markets surged on the back of positive undertone in New York trading and volatile Shanghai markets soared 5% at close.
Indexes in London, Frankfurt, Madrid, Milan and Paris soared more than 3% in active trading after six days of losses.
In Shanghai, market indexes dropped 0.65% in the final hour of trading and then market sentiment reversed and surged to close up 5% as state controlled banks stepped up to add more stocks.
Sensex in Mumbai soared 2% as the central government offered preliminary details for the development of 98 smart cities covering 13% of urban population.
Nikkei average in Tokyo rebounded more than 1% for the second day in a row and Australian market indexes advanced for the third day in a row.