NEW YORK (Reuters) - Stocks rallied on Thursday on positive economic
data and the European Central Bank's agreement to launch a new and
potentially unlimited bond-buying program to lower struggling euro zone
countries' borrowing costs.
U.S. data showed signs of improvement in the labor
market ahead of the all important non-farm payrolls report on Friday and
also stronger growth in the services sector.
ECB President Mario Draghi, seeking to back up his July
pledge to do whatever it takes to preserve the euro, said the central
bank's new plan would address bond market distortions and "unfounded"
fears of investors about the survival of the euro.
The program, which Germany's Bundesbank is known to
have opposed, would focus on bonds maturing within three years and was
strictly within the ECB's mandate. Draghi said only one member of the
ECB Governing Council had dissented.
"It's definitely giving more comfort to the market. It
was what the market was looking for, and we can see that the yields on
Italian, Spanish and Portuguese bonds have already come down," said Rex
Macey, CIO of Wilmington Trust Investment Advisors.
Data showed the pace of growth in the massive U.S.
services sector rose in August on the back of a rebound in employment
and exports, though a measure of new orders declined.
Prior to Draghi's news conference, a separate report
showed U.S. private employers added 201,000 jobs in August, easily
beating economists' expectations.
Another report showed the number of Americans filing
new claims for jobless benefits fell last week to its lowest level in a
month, also an upbeat signal for a labor market that has struggled to
create enough jobs.
The Dow Jones industrial average (^DJI) gained 174.49 points, or 1.34 percent, to 13,221.97. The Standard & Poor's 500 Index (^GSPC) rose 18.63 points, or 1.33 percent, to 1,422.07. The Nasdaq Composite Index (^IXIC) climbed 39.66 points, or 1.29 percent, to 3,108.93.
Earlier, the ECB also announced that it will keep its
main interest rate at a record low of 0.75 percent, holding fire after a
pick-up in inflation last month offset pressure to breathe life into
the flagging euro zone economy by easing borrowing costs.
In company news, Supervalu Inc (SVU) said it would close about five dozen stores as it works to turn around its grocery business, which lags Kroger Co (KR) and Wal-Mart Stores Inc (WMT). The stock was up 1.8 percent at $2.32.
Realty Income Corp (O.N) plans to acquire American
Realty Capital Trust Inc (ARCT.O) for about $1.93 billion as it looks to
diversify its portfolio outside of the retail industry. Shares of
Realty Income rose 3.3 percent to $43.90 and Capital Trust rose 4.8
percent to $12.53.
{ 0 comments... read them below or add one }
Post a Comment