Stocks rally on ECB's bond-buying plan

The S&P 500 hits a 4-year high and the Dow jumps more than 200 points after the European Central Bank also keeps its key rate unchanged. US jobless claims decline, and private employers hire more workers than expected. The US services sector expands.

By Melly Alazraki Sep 6, 2012 9:24AM
stock market Updated at 12:03 p.m. ET

Stocks rallied Thursday as investors felt bullish after the European Central Bank announced it was leaving rates unchanged and as its president, Mario Draghi, agreed to a new bond-buying program. On the domestic front, a handful of better-than-expected employment reports looked encouraging ahead of Friday's monthly jobs data.

The Dow Jones Industrial Average ($INDU) was up 237 points at 13,285. The S&P 500 ($INX) was up 27 points at 1,430, topping its highest closing level since 2008, Bloomberg reported. The Nasdaq Composite ($COMPX) was up 62 points at 3,131.

European stocks were higher and the euro approached a two-month high against the dollar as the ECB left its benchmark rate at a record low of 0.75%. The Bank of England also left its benchmark rate unchanged at 0.5%.

ECB announces bond-buying plan
The ECB outlined a bond-buying program to lower struggling eurozone countries' borrowing costs, Draghi said. The program, aimed at the secondary market, would also help safeguard the euro.

The program, which the Bundesbank is known to have opposed, would focus on bonds maturing within three years. "We are strictly within our mandate," Draghi said, according to Reuters. Draghi said only one member of the ECB Governing Council had dissented. Eurozone growth data
Second-quarter growth in the in the 17 countries using the euro decreased by 0.2% compared with the previous quarter, according to second estimates released by Eurostat. GDP for the eurozone was 0.5% lower than the same quarter last year.

Strong exports limited the eurozone's economic contraction in the second quarter despite falling investment, inventories and private consumption that point to output shrinking overall in 2012.

US jobs numbers

Fewer Americans than forecast filed for unemployment benefits last week as jobless claims fell to their lowest level in a month, easing concerns that the labor market may weaken in the second half, Bloomberg reported.


Jobless claims decreased by 12,000 to 365,000 in the week ended Sept. 1, the Labor Department reported. Economists had expected jobless claims to drop to 373,000, according to Briefing.com. The four-week average inched up by 250 to 371,250. Claims in the previous week were revised to an increase of 3,000 to 377,000 compared with the initial estimate that they held steady at 374,000.


Payrolls processor Automatic Data Processing showed employers added 201,000 private-sector jobs in August, much more than the expected 143,000, according to Briefing.com. Moreover, the July figure was revised up to 173,000 from the previously reported 163,000.


The ADP report follows one from outplacement firm Challenger, Gray & Christmas that showed more than 32,000 planned job cuts in August, fewer layoffs than were announced in July.


Employment data and the Fed

The three reports offer a glimpse into what Friday's government employment report could reveal. Economists expect employers added 123,000 jobs in August, according to Briefing.com. Investors will pay especially close attention to Friday's jobs report, as it will likely influence the Fed's decision on more quantitative easing.


While recent reports show employers are limiting firings because of improved demand, weak hiring and an unemployment rate above 8% pose a "grave concern," Fed Chairman Ben Bernanke said last week as he made a case for further monetary easing.


Meanwhile, U.S. service industries expanded in August at a faster pace than forecast. The Institute for Supply Management's non-manufacturing index climbed to a three-month high of 53.7 from 52.6 in July. Economists had expected it to ease to 52.4, according to Briefing.com.


Stocks to watch

American International Group (AIG) has unveiled a plan to sell up to $2 billion shares of AIA Group Ltd. in Hong Kong to raise proceeds for general corporate purposes and said it has been authorized to buy back up to $5 billion in stock, MarketWatch reported.


Navistar International (NAV) shares soared after the company reported fiscal-third-quarter results that were lower than last year's but still beat expectations. The truck maker also unveiled a restructuring plan. 


VeriFone Systems (PAY) shares fell after the company reported a rise of 43% in fiscal-third-quarter net income on higher revenue, led by its services business. However, the electronics payment company also predicted weak fourth-quarter revenue.


Supervalu (SVU) will close about 60 "underperforming or non-strategic" stores in an effort to trim its expenses. The supermarket operator will record $80 million to $90 million in closure-related charges for fiscal 2013.


Amazon.com (AMZN) shares rose ahead of a media event in which the online retailing giant could unveil a new Kindle Fire tablet, according to analyst speculation.

Apple (AAPL), which is widely expected to show off its new iPhone 5 at an event next week, also rose.

207Comments
Sep 6, 2012 10:24AM
avatar
Increase all in service sector jobs- McDonald's replacing college workers- wow that should buy a house.
Sep 6, 2012 10:24AM
avatar
As long as you are editing... how about changing that header to: Wall Street Refuses to Invest in America, Sends BILLIONS Overseas to Buy Hope and Prayer Euro Bonds. 
Sep 6, 2012 10:22AM
avatar
Hey Melly what's that smelly coming from your office? Stocks rally on ECG Bong-Buying Plan. Don't forget the chocolate chip cookies!!!
Sep 6, 2012 10:19AM
avatar
When plunder becomes a way of life for a group of men in a society ! Over a course of time they create for themselves a legal system that authorizes it and a moral code that glorfies it !    Written 162 years ago. Does it sound familiar ? Would not want to name any names=The To Big To Fail Banking Cartel=The ABOVE THE LAW GANG= SERIOUSLY TAKE YOU MONEY AND RUN !!
Sep 6, 2012 10:17AM
avatar
Brutus ask the American Indian that's what Gen Sherman then sugested to Grant first he offered to kill them.
avatar
Europe has festering economic AIDS from screwing around with Keynes.

Time for Europe to get on its knees and take a load of cure from von Mises.

USA,  start getting your clothes off --- YOUR NEXT !

Sep 6, 2012 10:17AM
avatar
Just read some comments on another post. Hilarious.  There is not one possible way that anyone will distract those "ingrained".  Reading this....those responses.  I will ""dumb" it down to their, level,  See puff run and the big bad wolf has found Alice in wonderland.  That "black" rabbit was not in the script....which he is .... if true in birth....which is not.  You continue and it becomes more fun fo you in supporting and "cheers"  Just toss out a fly and the "fish" will bite. 
Sep 6, 2012 10:17AM
avatar
I read somewhere the other day that the fed will hold the market above 13 until after the election is over. Between hope and a train load of tax payer money. The I hope the train doesnt break down....
Sep 6, 2012 10:15AM
avatar

PAY NO ATTENTION TO THE MAN BEHIND THE CURTAIN!

I DON'T THINK WE ARE IN KANSAS ANYMORE TOTO!!

KEEP DIGGING A BIGGER HOLE WE ARE GOING TO NEED IT!

 

Sep 6, 2012 10:14AM
avatar
::.Stocks rally on ECB's bong-buying plan::.

LOL...bong-buying????  Maybe that'll work....LOL   Nice proofreading MSN...

Sep 6, 2012 10:12AM
avatar
"Food stamp use reached a record 46.7 million people in June, the government said..."

The easiest way to acquire power and maintain control over people is to make as many of them dependent on you as possible.  The more people who are dependent on you, especially for the basic necessities of life, the more powerful you become.  The current administration has certainly been successful in their quest for more power and more control.  And almost half of us will vote to give them another 4 years to continue this quest  -  so sad.
avatar
Ask for more jobs from government doing something --- you get more spending and less productive/sustainable jobs.  The more the fed government does, the less you are invested in job growth.

Sep 6, 2012 10:11AM
avatar
BONG BUYING??? Really, and all along I thought it was a bond issue. LOL.
Sep 6, 2012 10:08AM
avatar
So it all comes down to job recovery but instead of doing that- bonds work? Who are they kidding?

As for our Dow skyrocketing on hope and speculation, where are our Armed Forces when we need them? 200+ Dow points recovers all the lost jobs here in America and revives us. Isn't betting on an overseas calamity while ignoring ours-- terrorism or treason?

avatar
Come on Obama --- give us the best yet from your teleprompter puppeteers.
Sep 6, 2012 10:04AM
avatar
President Mario Draghi agreed a new bond-buying program was smart move and keep countries form defaulting. how ever investment spending is too low for recovery. exports need to increase or imports need to decrease. tariff on all goods out side the euro zone need to be rise so there be money bail countries.
Sep 6, 2012 10:02AM
avatar
The Best is yet to come -  despite the republicans "NO" strategy which has boomeranged as a colossal failure.and despicable example of selfishness over public interest.
avatar

and so it begins

 

The USA, JAPAN and now Europe are caught in the governmental debt trap with no way out

 

collapse of the western economies is merely a few months away

 

Europe is soon going to drop their key rate to zero

 

there is no way to operate the debt trap without zero percent interest rates

 

Well folks things have gone from the pan to the fire.

Sep 6, 2012 9:57AM
avatar
so the stocks (and spammers) are off and running again!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.