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.
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.
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.
Its simple George drove the car into the ditch, then they say fix it, all the while they hold the keys to the toe truck.
The EU has been in recession (overall out put has shrunk in 2012), a 0.2 contraction in growth this quarter, their GDP down 0.5 from the same quarter last year, and yet everyone is feeling good about pilling more cheap debt on top of existing debt. WOW!!!!!
Good thing I'm in the position to 'ride this wave' without resorting to increasing my risk. Many are not, especially in Europe. Like I stated yesterday, try and keep your investment interests here in the USA or you'll get burned for sure.
That would be their (WS) contribution/attempt to safe Mr. O. ....
What a bunch of clowns and liars .....
MITT WILL BE THE NEXT PRESIDENT!!
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!
LOL...bong-buying???? Maybe that'll work....LOL Nice proofreading MSN...
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.
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