Wall St up on US economy optimism

Specialist Michael Gagliano, left, who handles energy stocks, works with traders on the floor of the New York Stock Exchange. File photo / AP

Equities on Wall Street gained overnight, along with the US dollar, amid optimism the American economy remains on firm footing after a report showed spending on construction is outpacing forecasts.

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.51 per cent, the Standard & Poor's 500 Index gained 0.54 per cent, while the Nasdaq Composite Index added 0.41 per cent.

Gains in shares of Chevron and those of Exxon Mobil, up 2.4 per cent and 2.1 per cent respectively, propelled the Dow higher, even as oil resumed its downward slide. Bucking the trend were shares of AT&T and Verizon, down 1.6 per cent and 1.1 per cent respectively.

Shares of Digital Ally soared, last up 33.5 per cent, a day after President Barack Obama announced a US$263 million package that includes funding to buy 50,000 body-worn cameras for US police officers as part of a response to civil rights protests in Ferguson, Missouri.

The US dollar climbed, helped by further evidence the US economy is growing at a solid clip. A Commerce Department showed construction spending increased 1.1 per cent in October, the biggest gain since May.

"Dollar strength is here to stay, and it is going to only continue as we move toward less accommodative policy," Jennifer Vail, the head of fixed income at Minneapolis-based US Bank Wealth Management, told Bloomberg News. "We're seeing some continuing signs of stabilisation in growth domestically."

Meanwhile, oil declined, resuming its slide since Opec on Thursday decided not to curb supply to help prices recover. Today's downward trigger was news of a deal to allow the export of oil from land controlled by Kurds in Iraq.

"I am not surprised the price is going down. The market is looking for a renewed sense of direction and trying to figure out if we have hit the bottom or if we are about to go lower again," Michael Hewson, an analyst at CMC Markets, told Reuters.

"I think there is a lot of ebb and flow, and at the moment there is a battle going on between the bulls and the bears in light of the really strong rally we saw yesterday," Hewson added.

In Europe, the Stoxx 600 Index finished the session with a gain of 0.5 per cent from the previous close. France's CAC 40 rose 0.3 per cent, while the UK's FTSE 100 Index climbed 1.3 per cent.

Germany's DAX Index fell 0.3 per cent, though it earlier rose to its highest since July.

Shares of Friends Life Group rose 2.4 per cent after Aviva agreed to pay 5.6 billion pounds (US$8.8 billion) in stock to create the UK's largest insurer.

Shares of BP rallied 4.7 per cent while those of Royal Dutch Shell strengthened 4.1 per cent, amid speculation about a Shell bid for BP.