European bank action, employment outlook push stocks higher
By Bloomberg | September 6, 2012 11:02 am
Stock markets jumped Thursday, with the S&P 500 surpassing the highest closing level since 2008, after the European Central Bank announced specifics of its bond-buying plan and jobless-claims data boosted optimism in the labor market.
The S&P 500 was up 28.68 points, or 2.04%, to close at 1,432.12, the Dow Jones industrial index rose 244.52 points, or 1.87%, to 13,292.00; and the Nasdaq composite was up 66.54 points, or 2.17%, at 3,135,81. All numbers are preliminary.
“We are in a period where we are peeling away the onion little by little, all the uncertainties, what's going to happen in Europe and what's going to happen here,” Dan Veru, chief investment officer at Palisade Capital Management, said in a telephone interview. Mr. Veru added that Mario Draghi, ECB president, “is serious about putting Europe on the positive path.”
Mr. Draghi said policymakers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the eurozone. He said the ECB will have a “fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability.”
U.S. jobless claims declined last week, and companies added more workers than forecast in August, reports showed Thursday before monthly payrolls data on Friday. Service industries in the U.S. expanded in August at a faster pace than forecast.
Thursday's rally helped the S&P 500 break out of a 19-point trading range that the index has been confined to since Aug. 7. The gauge spent the past four weeks hovering around 1,400 as investors awaited policy clues from central banks. Federal Reserve Chairman Ben S. Bernanke said in Jackson Hole, Wyo., last week that he wouldn't rule out more stimulus.
The index has rallied 12% from a June low amid optimism central banks worldwide will act to spur growth and as corporate earnings beat analysts' estimates.