Stocks soared Friday after retail sales data showed that US consumers continue to spend more in the latest signal of the economy’s resilience despite high inflation and rising interest rates.
Better-than-expected results from Citigroup also helped temper concerns about what lies ahead for investors as more companies report second-quarter results.
The euro held above $1.00, having sunk below parity this week on fears Russia would cut off Europe’s gas supplies in retaliation for Ukraine war sanctions.
Oil prices rebounded, after slumping Thursday on recession fears.
Wall Street pushed higher on a better-than-expected 1.0 percent rise in retail sales in June.
While not adjusted for inflation, sales were still up 0.7 percent even when gasoline was removed from the calculation, according to the Commerce Department data.
“This could be good news for US GDP which suggests that the economy may well avoid a contraction in (the second quarter), and ergo a technical recession,” said analyst Michael Hewson at CMC Markets.
The figure was also looked at through the prism of how it might affect the US Federal Reserve’s decision later this month on interest rates, with the solid growth giving policymakers license to hike rates more aggressively.
Markets had taken a major knock this week from news that annual US inflation zoomed to a new 40-year high of 9.1 percent in June on energy costs.
After rate increases by several countries, investors now expect the Fed to hike  by 75 basis points later this month, as officials battle to cool soaring prices, though some observers suggest a one-percentage-point move could even be on the cards.
While experts warn that raising US rates risks hammering the economy, the Fed has made it clear the number-one priority is bringing down inflation.
Meanwhile, Citigroup’s net profits fell by 27 percent to $4.5 billion, yet earnings per share easily beat expectations. The banking group took in more revenue and benefited from rising interest rates.
Citigroup shares jumped more than 13 percent.
The blue-chip Dow Jones Industrial Average led the major US indices, climbing 2.2 percent to 31,288.26, snapping a five-day losing streak.
European stocks also finished the day sharply higher.
In Asia, Hong Kong and mainland Chinese equity markets led losses after data showed China’s economy grew just 0.4 percent in the second quarter, battered by Covid lockdowns in major cities including Shanghai and Beijing.
The reading was well off the 1.6-percent growth predicted by analysts in an AFP survey
Key figures at around 2030 GMT
New York – Dow:Â UP 2.2Â percent at 31,288.26 (close)
New York – S&P 500: UP 1.9 percent at 3,863.16 (close)
New York – Nasdaq: UP 1.8 percent at 11,452.42 (close)
London – FTSE 100: UP 1.7 percent at 7,159.01 (close)
Frankfurt – DAX: UP 2.8 percent at 12,864.72 (close)
Paris – CAC 40: UP 2.0 percent at 6,036.00 (close)
EURO STOXX 50: UP 2.4 percent at 3,477.20 (close)
Tokyo – Nikkei 225: UP 0.5 percent at 26,788.47 (close)
Hong Kong – Hang Seng Index: DOWN 2.2 percent at 20,297.72 (close)
Shanghai – Composite: DOWN 1.6 percent at 3,228.06 (close)
Euro/dollar: UP at $1.0088 from $1.0018 Thursday
Pound/dollar: UP at $1.1865 from $1.1824
Euro/pound: UP at 85.00 pence from 84.73 pence
Dollar/yen: DOWN at 138.54 yen from 138.96 yen
West Texas Intermediate: UP 1.9 percent at $97.59 per barrel
Brent North Sea crude: UP 2.1 percent at $101.16 per barrel