U.S. stocks end up on talk of Fed easing; Dow up 0.32%

Investing.com - U.S. stock prices rose on Friday after weaker-than-expected Chinese trade data broke and fueled market views that the Federal Reserve will stimulate the U.S. economy with monetary tools that send stocks rising as a side effect.

Downward revisions to European growth forecasts sparked buying even more on the notion the European Central Bank will take steps to prop up the economy there as well.

At the close of U.S. trading, the Dow Jones Industrial Average ended up 0.32%, the S&P 500 index was up 0.22% while the Nasdaq Composite index was up 0.07%.

It was the fifth consecutive week of gains for both the Dow Jones and the S&P 500.
China reported earlier that its trade surplus narrowed unexpectedly in July, dropping to USD25.1 billion from a USD31.7 billion surplus. 

Economists were expecting a USD35.1 billion surplus.

Ebbing demand for Chinese exports spooked markets worldwide on fears the global economy may be battling stronger headwinds than once thought.

Meanwhile in Europe, the European Central Bank this week trimmed its forecast for economic growth to 0.6% in 2013, down from 1% previously.

The ECB also forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast for a 0.2% contraction.

The news cemented views that central banks around the world will take steps to stimulate their respective economies with monetary policy tools, which tend to weaken safe-haven currencies like the dollar and send stocks rising.

Federal Reserve officials have said they cannot rule out rolling out a third round of asset purchases from banks, a stimulus tool known as quantitative easing that pumps liquidity into the economy to spur recovery, pushing down interest rates as low as possible that make stocks an attractive investment venue.

European Central Bank President Mario Draghi has said monetary policy officials will do whatever it takes to bolster the economy, which kept the bulls in the market.

China, meanwhile, has room to loosen policy as well.

Still weak economic indicators indicate a tepid recovery, which rattled nerves, while rising fuel and food prices primed concerns that consumer demand may remain weak, which dampened the rally.

Leading Dow Jones Industrial Average gainers included Hewlett-Packard, up 1.55%, Alcoa, up 1.35%, and McDonald's Corp., up 1.16%.

The Dow Jones Industrial Average's worst performers  included American Express, down 1.13%, Cisco Systems, down 0.90%, and Walt Disney, down 0.64%.

European indices, meanwhile, finished down.

After the close of European trade, the EURO STOXX 50 fell 0.57%, France's CAC 40 fell 0.61%, while Germany's DAX 30 finished down 0.29%. Meanwhile, in the U.K. the FTSE 100 fell 0.08%.