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1st LD Writethru: U.S. stocks surge after BOJ's surprise move

Xinhua, January 30, 2016 Adjust font size:

U.S. stocks posted solid gains Friday, as the Bank of Japan (BOJ) unexpectedly decided to implement a negative interest rate policy.

The Dow Jones Industrial Average leapt 396.66 points, or 2.47 percent, to 16,466.30. The S&P 500 soared 46.88 points, or 2.48 percent, to 1,940.24. The Nasdaq Composite Index jumped 107.28 points, or 2.38 percent, to 4,613.95.

After the conclusion of a two-day policy board meeting, the BOJ said Friday it would introduce negative interest rates from next month to encourage more lending and business spending amid projections that the central bank will not clear its 2 percent inflation goal.

The BOJ surprised markets here, with economists widely believing that further easing measures announced Friday would be negligible if at all. The BOJ said it plans to introduce a negative interest rate from Feb. 16, as falling oil prices have hampered the bank's reflationary efforts.

While the European Central Bank has already plunged into negative interest rates, the BOJ initially said it was reluctant to follow suit.

Tokyo stocks closed sharply higher Friday after the BOJ decision, with the 225-issue Nikkei Stock Average surging 2.80 percent.

Also, the market got support following the release of U.S. real gross domestic product (GDP) data for the fourth quarter of 2015. The weak GDP data raised expectations that the U.S. Federal Reserve would go slow on future interest rate hikes.

The U.S. real GDP increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the advance estimate released by the Commerce Department Friday. In the third quarter, real GDP increased 2.0 percent.

Real GDP increased 2.4 percent in 2015, unchanged as in 2014.

Meanwhile, the final reading of consumer sentiment index published by Thomson Reuters/University of Michigan came in at 92.0 for January, missing market consensus of 93.0.

In corporate news, shares of Amazon.com plunged 7.61 percent to 587.00 U.S. dollars apiece Friday after the e-commerce giant reported weaker-than-expected quarterly results.

For the week, the Dow gained 2.3 percent, the S&P 500 added 1.7 percent, while the Nasdaq was up 0.5 percent. Endit