Oil's plunge powers rally on Wall Street

By Kristina Cooke

NEW YORK (Reuters) - U.S. stocks soared on Friday rounding out their best week in more than three months, as oil plunged below $115 a barrel, easing inflation concerns and improving prospects for business and consumer spending.

The slide in oil prices to their lowest level in three months powered the biggest rally in retailing shares in six years, with Home Depot (HD.N: Quote, Profile, Research, Stock Buzz) gaining 7.7 percent.

That eclipsed a steeper-than-expected quarterly loss from mortgage finance company Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz).

In fact, financials rallied, helped by the view that lower inflation will make it easier for the Federal Reserve to put off interest-rate increases, at a time when the financial sector is still struggling with tighter credit conditions.

"We're at the lowest level in oil prices in months and there is a real feeling that the trend has turned," said Al Kugel, chief investment strategist at Atlantic Trust.

"Lower oil prices are good for businesses and good for consumers, for the inflation picture, and they will improve growth somewhere down the line. So it's 'win win.'"

The Dow Jones industrial average .DJI rose 302.89 points, or 2.65 percent, to 11,734.32, while the Standard & Poor's 500 Index .SPX jumped 30.25 points, or 2.39 percent, to 1,296.32. The Nasdaq Composite Index IXIC gained 58.37 points, or 2.48 percent, to 2,414.10.

For the week, the Dow gained 3.6 percent, the S&P 500 advanced 2.9 percent and the Nasdaq shot up 4.5 percent. It was the best week for all three indexes since April 20.  Continued...