U.S. stocks close higher as oil prices stabilize

13:32, February 26, 2011      

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U.S. stocks rebounded on Friday after three days of sell-off as oil prices stabilized.

Stocks have been under severe pressure during previous sessions as investors worried the unrest in Libya would spread to other oil- rich countries and disrupt oil supplies.

However, the concerns eased late Thursday after the International Energy Agency announced that any shortfall could be easily made up by tapping oil reserves in other countries.

Meanwhile, Saudi Arabia, the world's largest oil exporter raised output on Friday, further calming fears of supply disruptions caused by Libya's turmoil.

The stabilization in crude also make investors less worried about the negative impact soaring oil prices could exert on companies' costs and consumer spending.

Also lifting stocks, the index of consumer sentiment rose to 77. 5 in February, the highest level in three years, according to a survey by Thomson Reuters and the University of Michigan, showing Americans felt better about the economy despite high unemployment rate and rising gasoline prices.

Investors also shrugged off a downbeat report showing the U.S. economy was expanding at a slower pace.

The Commerce Department reported early in the morning that the U.S. gross domestic product grew at an annual rate of 2.8 percent in the October-December quarter, weaker than the previous estimate of 3.2 percent.

In corporate news, American International Group (AIG) posted an 11.2-billion-dollar fourth-quarter profit late Thursday, but its shares tumbled nearly 5 percent as surprising fourth-quarter charges to the insurance-giant's aircraft division spooked traders.

Boeing jumped 2.18 percent, one of the best performers among the Dow components, after it gained a 30-billion-dollar contract to build 179 new U.S. Air Force refueling planes.

As of Friday's close, the Dow Jones industrial average rose 61. 95 points, or 0.51 percent, to 12,130.45. The Standard & Poor's 500 Index was up 13.78 points, or 1.06 percent, to 1,319.88. The Nasdaq gained 43.15 points, or 1.58 percent, to 2,781.05.

However, major indexes still dropped for the week, their first weekly losses in a month.

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