U.S. Markets Rally On Bernanke Comments, Falling Oil

New York, NY (AHN) - U.S. markets were bought up on Friday. Positive inflation comments from Fed Chairman Bernanke and a big drop in oil prices sparked a broad-based rally in stocks.

Fed Chairman Ben Bernanke, speaking at an annual retreat in Jackson Hole, WY, said with the dollar stabilizing, coupled with recent declines in commodity prices, that inflation is likely to slow. His word sparked a rally in the markets as investors view that as a sign the Federal Reserve will likely leave interest rates unchanged the next time they meet.

Meanwhile, oil saw its worst one-day sell off on a percentage basis since 2004. The commodity shed $6.59 a barrel, settling at $114.59 on the New York Mercantile Exchange.

The Dow Jones Industrial average rose 197 points or 1.73 percent as 28 of 30 components were higher on the session. The two energy components, Exxon and Chevron, were the only laggards. General Motors provided the biggest boost, up 5.2 percent.

The S&P 500 added 14 points or 1.1 percent as eight of the 10 major economic sectors were up. With oil falling the energy and materials sectors were the only ones to finish lower. The financial sector posted the largest gain Friday, up 3.1 percent.

Financials received some strength on news that Lehman Bros. may be an acquisition target of a Korean bank. Lehman shares rose 5 percent on the news.

The airline stocks, which generally move inverse to oil, surged on Friday. The AMEX Airline Index rose 8.2 percent.

The Nasdaq Composite was strong as well, up 34 points or 1.4 percent on Friday. The semiconductor stocks were strong across the board with the sector adding 1.3 percent on the session.

Even with Friday's gains, all three major averages finished slightly lower for the week.