U.S. stocks rally as rate hike fears abate

U.S. stocks traded higher in the morning session Friday as worries about a summer rate hike appeared to recede after recent stock declines.

By midday, the Dow Jones Industrial Average added 107.42 points, or 0.62 percent, to 17,542.82. The S&P 500 gained 15.31 points, or 0.75 percent, to 2,055.35. The Nasdaq Composite Index jumped 63.26 points, or 1.34 percent, to 4,775.79.

Investors tried to shake off worries that the possibility of a June rate hike becomes higher after the release of the Federal Reserve's hawkish minutes from its April meeting.

According to the Fed's minutes, one factor in whether a June rate hike happens is how upcoming economic data turns out.

"Yesterday's unexpected weakness in the Philly Fed index followed an unexpected drop in the NY Fed's Empire manufacturing Survey, suggesting this year's spring bounce may not be as strong as 2015's. It's one more reason to think the Fed's confidence in the economy may be overblown," said Chris Low, chief economist at FTN Financial.

On the economic front, despite ongoing inventory shortages and faster price growth, existing-home sales sustained their recent momentum and moved higher for the second consecutive month, reported the National Association of Realtors Friday.

U.S. total existing-home sales rose 1.7 percent to a seasonally adjusted annual rate of 5.45 million in April from an upwardly revised 5.36 million in March.

In corporate news, shares of Gap surged over 3 percent around midday Friday after the company posted quarterly results generally in line with market estimates. The San Francisco-based retailer also announced that it will shut 75 stores outside the United States. Endit