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Stocks rally; Hewlett-Packard gains help boost Dow index

The Dow Jones industrial average rose 119.95 points, or 0.9 percent, to end at 14,000.57, leaving it up 0.1 percent for the week.

HP led Dow gains a day after the company projected a second-quarter profit and reported quarterly revenue that topped estimates. Shares of HP surged 12 percent. Wall Street also found support from a survey of German business executives showing sentiment in February rose to its highest reading since April.

Recovering some of the losses sustained during the past two sessions - its worst two-day drop since early November - the Standard & Poor’s index climbed 13.18 points, or 0.9 percent, to 1,515.60.

For the week, however, the S&P 500 fell 0.3 percent, snapping its seven-week winning streak, its longest such stretch since the one that ended Jan. 14, 2011.

“The general advice is to watch for a shorter-term correction, but recognize we may not be there yet. This market may not be ready yet to give up the ghost,” said Bruce McCain, chief investment strategist at Key Private Bank.

McCain is among the market strategists who believe equities are in need of a pullback to digest recent gains, saying a return by the S&P 500 to 1,400 or below would be reasonable, and would allow the benchmark index to move on to yearly gains of 10 percent to 15 percent.

The Nasdaq composite gained 30.33 points, or 1 percent, to end at 3,161.82; for the week, the index dropped 1 percent.

Among individual stock movers, Cabot Oil & Gas Corp. was among the top gainers in the S&P 500. Its shares rallied 11 percent after the oil and gas producer reported a 55 percent surge in fourth-quarter earnings, with the results topping expectations.

Abercrombie & Fitch Co. was the top decliner in the S&P 500, with its shares down 4.5 percent after the clothing retailer’s disappointing full-year outlook spooked investors.

The underlying trend for equities in the U.S. and globally is anticipating what monetary authorities will be doing, said McCain. “We’re back to reading Federal-Reserve tea leaves, trying to figure the amount of money they are going to pump in both here and overseas,” he said.

Federal Reserve Chairman Ben Bernanke brushed off talk the central bank’s ultra-easy monetary policy is creating asset bubbles, Bloomberg News reported Friday, citing unnamed people who went to a meeting Bernanke held this month with dealers and investors.

Bernanke’s reported comments to the 15-member Treasury Borrowing Advisory Committee dismiss a key concern coming out of the minutes of the last Fed meeting, namely varying views that hinted “our Fed is going to ease up on its easing,” said McCain, who discounted such a move anytime this year.

Bernanke will testify on monetary policy to Congress next week.

Friday’s rise follows two straight days of declines that had the Dow industrials losing 155.05 points.

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