Stocks rose on Friday, breaking a three-day losing streak, as investors sought to benefit from a fall in the dollar by buying shares of multinationals and commodity companies.
Continuing concern about the credit rating of the United States pushed the dollar to its lowest level this year, driving up commodity prices such as gold, while U.S. Treasuries saw further declines.
Shares of gold producer Newmont Mining Corp
Shares of energy companies such as Exxon Mobil Corp
We are optimistic about what most people would call weak dollar plays -- commodity-oriented stocks, multinational companies, said John Buckingham, chief investment officer at The Al Frank Fund in Laguna Beach, California.
If you are a long-term oriented investor, which is what we are, energy and metals-related companies should have a place in your portfolio.
Having some gold exposure in a portfolio is a good idea, he continued. Obviously gold has done very well in the last couple of weeks.
A weaker dollar makes some U.S. assets more appealing to some investors, and multinationals benefit when they convert overseas earnings into dollars.
The Dow Jones industrial average <.DJI> gained 56.48 points, or 0.68 percent, to 8,348.61. The Standard & Poor's 500 Index <.SPX> rose 5.20 points, or 0.59 percent, to 893.53. The Nasdaq Composite Index <.IXIC> added 10.13 points, or 0.60 percent, to 1,705.38.
Shares of Sears Holdings Corp
The Chicago Board Options Exchange Volatility Index <.VIX>, also known as Wall Street's fear gauge, edged up 0.3 percent and remained above 30, a key psychological level, according to some analysts, after spiking on Thursday.
Ratings agency Standard & Poor's rattled markets on Thursday when it said it might cut Britain's AAA credit rating because of the danger of soaring public debt, sparking fears a similar fate might await the United States.
However, markets regained some composure by Friday. Moody's Investors Service said late Thursday it was comfortable with the AAA sovereign rating on the United States, while President Barack Obama said he is not concerned about a possible credit rating change.
With the Memorial Day long weekend approaching, volume was light on the New York Stock Exchange, adding to volatility in the session. U.S. financial markets will be closed on Monday.
The S&P 500 index was on course to finish the week up about 1 percent after retreating last week amid concerns about the economy. The broad based index is up 32 percent since hitting a 12-year closing low on March 9.
(Reporting by Edward Krudy; Editing by Kenneth Barry)