US open: Stocks rally as oil prices edge higher

US stocks rallied on Friday as oil prices rose and data showed import prices fell less than expected last month.

At 1430 GMT, the Dow Jones Industrial Average was up 0.27%, the S&P 500 rose 0.47% and the Nasdaq increased 0.26%.

Oil prices gained after the International Energy Agency (IEA) said in its monthly report that there are signs oil prices “might have bottomed out” and there is now “light at the end of what has been a long dark tunnel”.

The IEA estimated that oil production outside the OPEC cartel will fall by 750,000 barrels a day this year - 150,000 barrels a day more than it estimated last month - easing concerns about the supply glut.

West Texas Intermediate jumped 1.66% to $38.48 per barrel and Brent crude increased 1.18% to $40.53 per barrel at 1357 GMT.

US import prices fell for an eighth straight month in February although less than analysts had expected. The Labor Department said import prices dropped 0.3% last month after a revised 1.0% decrease in January. Analysts had pencilled in a 0.7% slide.

Meanwhile, investors continued to digest Thursday’s European Central Bank policy announcement.

The ECB slashed its main interest rate by 5 basis points to 0.00% and increased quantitative easing by €20bn to €80bn from April, which was more than the €10bn market participants had been expecting.

In addition, the central bank cut the deposit facility rate by 10bps to -0.40% and lowered the margin lending facility rate to 0.25% from 0.30%.

Stocks initially surged on the news but soon reversed course as ECB chief Mario Draghi said in the press conference that policymakers were concerned that pushing rates too low could impact balance sheets, denting prospects of further rate cuts.

“It’s amazing what the concept of an extra €20 billion of QE working its way into the markets on a monthly basis can do for confidence,” said Alastair McCaig, market analyst at IG.

“Expectations had been high, and to be fair the ECB delivered at the top of the range. Traders though are a cynical bunch, and the extent of stimulus measures was taken as a signal of how worried the ECB was about the current state of affairs in Europe, as opposed to how determined it was to help improve the outlook.”

The next big focus for investors will be the rate announcement by the Federal Open Market Committee on 16 March.

The Federal Reserve is widely expected to stand pat on rates but the announcement will be eyed for any clues on the path for interest rates.

In corporate news, Ulta Salon Cosmetics & Fragrance shares surged after its fourth quarter numbers beat analysts’ expectations.

Regeneron Pharmaceuticals edged higher after the biotechnology company said its rheumatoid arthritis drug had met its primary endpoint and was superior to a competitor’s drug when it came to improving symptoms.

In currencies, the dollar fell 0.06% against the pound, rose 0.53% against the euro and climbed 0.44% versus the yen.