Associated Press
Saturday, August 9, 2008

NEW YORK, Aug. 8 -- Wall Street rebounded smartly Friday, shooting higher as a surge in the dollar and another plunge in oil prices eased some of investors' worries about losses at mortgage finance company Fannie Mae. All the major indicators had their best weekly gains since April.

The Dow Jones industrial average rose 302.89, or 2.65 percent, to 11,734.32. The blue chips fell nearly 225 points Thursday after concerns about the financial sector, a weak showing by retailers in July and a spike in weekly unemployment claims; Friday's advance marked the seventh time in two weeks that the Dow rose or fell by triple digits. The Standard & Poor's 500-stock index advanced 30.25, or 2.39 percent, to 1296.32, and the Nasdaq composite index advanced 58.37, or 2.48 percent, to 2414.10.

On Friday, the dollar, which has sagged along with the economy, reached its highest level against the euro since February, injecting the stock market with confidence. And because the dollar's strength has contributed to the recent skid in oil prices, light, sweet crude dropped sharply again, falling $4.82 a barrel, to settle at $115.20 on the New York Mercantile Exchange. That brought crude's decline over the past four weeks to more than $30.

Investors see the drop in oil as a big boost for the economy because it should allow consumers to spend more freely. That's eased some concerns about the financial sector, which is still contending with the fallout from the year-old credit crisis.

Fresh financial worries surfaced Friday after Fannie Mae, the largest U.S. buyer and backer of home loans, reported a quarterly loss significantly larger than what Wall Street had expected and said it would cut its quarterly dividend to conserve cash.

The dollar's rise against the euro came after the European Central Bank and the Bank of England separately left their benchmark interest rates unchanged Thursday. With the ECB signaling that more rate increases aren't likely, the euro wasn't as attractive as an investment option.

Fannie Mae fell 90 cents, to $9.05.

McDonald's rose $3.81, to $65.67, after hitting a new trading high. The fast-food chain said same-store sales, or sales at locations open at least a year, rose 6.7 percent in the United States.