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 A drop in U.S. consumer sentiment in September to its lowest in a
year initially weighed on Wall Street, as the University of
Michigan's preliminary reading for the month slid to 85.7, compared
with the final reading of 91.9 in August and much lower than the
median forecast of 91.2 of economists polled by Reuters.
Stocks in Europe fell but still recorded the biggest weekly rise
since July. The pan-European FTSEurofirst 300 index closed down 1.0
percent at 1,401.07, and MSCI's all-country world stock index was
flat.
Wall Street rebounded in thin trade ahead of the Fed's
policy-setting meeting Sept. 16-17. The S&P 500 posted its biggest
weekly gain since July.
A small majority of forecasters predict the Fed will raise rates for
the first time in nearly a decade, even though models suggest
concerns about market volatility and economic growth will delay
monetary policy tightening.
A Reuters poll of 72 economists showed a slight majority expects
rates to rise from the current 0-0.25 percent.
"The knee-jerk reaction on the Fed lift-off is negative," said Phil
Orlando, chief equity strategist at Federated Investors in New York.
"We think the Fed lift-off is a positive for the economy and stocks,
because it means the Fed is rubber-stamping the fact they truly
believe the economy is strong enough."
The Dow Jones industrial average <.DJI> closed up 102.69 points, or
0.63 percent, to 16,433.09. The S&P 500 <.SPX> rose 8.75 points, or
0.45 percent, to 1,961.04 and the Nasdaq Composite <.IXIC> added
26.09 points, or 0.54 percent, to 4,822.34.
Goldman Sachs, Wall Street's most influential voice in oil trading,
slashed its 2016 forecast for U.S. crude prices to $45 a barrel from
$57 previously, and Brent to $49.50, down from $62, citing
oversupply and concerns over China's economy.
Goldman also said while not its base case, crude could fall further,
to near $20 a barrel.
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U.S. crude futures' front-month contract settled down $1.29, or 2.8
percent, at $44.63 a barrel. The front-month in Brent, the global
benchmark for oil, slid 75 cents, or 1.5 percent, to settle at
$48.14.
U.S. Treasury prices rose despite the gain in stocks and as
investors focused on whether the Fed will raise rates.
"It's all about whether the Fed indicates that they are going to do
some kind of tightening," said Tom di Galoma, head of rates and
credit trading at ED&F Man Capital Markets in New York.
Benchmark 10-year notes were last up 9/32 in price to yield 2.1884
percent.
German 10-year yields, the euro zone benchmark, were down 4 basis
points at 0.66 percent on growing doubts that the Fed would raise
interest rates next week.
The dollar was little changed in thin, listless trading ahead of
next week's Fed meeting.
The dollar index, a basket of currencies valued against the dollar,
fell 0.30 percent to 95.168.
(Additional reporting by Jamie McGeever; Editing by Nick Zieminski
and Dan Grebler)
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