U.S. stocks soar on talk of global monetary stimulus; Dow up 1.46%

Investing.com - U.S. stock prices soared on Friday on talk the Federal Reserve and the European Central Bank are set to stimulate their respective economies via monetary easing tools.

At the close of U.S. trading, the Dow Jones Industrial Average ended up 1.46%, the S&P 500 index was up 1.91% while the Nasdaq Composite index was up 2.24%.

Soaring yields in Spanish government debt markets prompted ECB President Mario Draghi to publicly state European monetary policy authorities will do all they can to save the eurozone, with markets concluding such measures will involve bond purchases from banks.

Talk that the Federal Reserve will stimulate the U.S. economy also through buying bonds from banks, known as quantitative easing, picked up steam on Friday in wake of lackluster second-quarter gross domestic product figures.

Quantitative easing pumps liquidity into the economy, weakening paper currencies while sending stock prices higher.

The U.S. GDP expanded 1.5% in the second quarter, according to advance estimates from the Commerce Department, in line with expectations.

However, expectations called for sluggish expansion in the first place, as the economy continues limping along its road to recovery and in greater need of a monetary crutch sooner or later.

Consumer sentiment figures behaved in a similar manner on Friday, beating estimates but confirming broader sentiment that recovery will require tools from the Fed that weaken the greenback in exchange for more price stability and conditions that foster job creation.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 72.3 in July from 73.2 in June.

Analysts, however, were expecting the figure to fall lower to 72.0, the preliminary figure for July.

The U.S. will release July's jobs report next week, and fears of lackluster numbers also primed talk of Fed intervention.

Leading Dow Jones Industrial Average gainers included Merck, up 4.08%, Caterpillar, up 3.47%, and Alcoa, up 3.30%.

The Dow Jones Industrial Average's worst performers  included Kraft Foods, up 0.10%, McDonald's Corp., up 0.21%, and Walt Disney Co., up 0.44%.

European indices, meanwhile, finished up.

After the close of European trade, the EURO STOXX 50 rose 2.23%, France's CAC 40 rose 2.28%, while Germany's DAX 30 finished up 1.62%. Meanwhile, in the U.K. the FTSE 100 rose 0.97%.