Benchmarks notched record highs again on Thursday following the
announcement of stimulus measures by the ECB intended to boost
Eurozone's recovery. The S&P 500 closed at a record high for
the 17th time this year. The blue-chip index also closed at a
record level for the 7th time this year. The Nasdaq too closed at a
level last seen in late March. Meanwhile, investors eagerly await
Friday's monthly US jobs report.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.6% to close
Thursday's trading session at 16,836.11. The Standard & Poor
500 (S&P 500) went up 0.7% to finish at 1,940.46. The
tech-laden Nasdaq Composite Index advanced 1.1% to 4,296.23. The
fear-gauge CBOE Volatility Index (VIX) dropped 3.3% to settle at
11.68. Total volume on the New York Stock Exchange was 3.1 billion
shares. Advancers outpaced declining stocks on the NYSE. For
76% stocks that advanced, 21% declined.
Benchmarks ended in positive territory following the announcement
of several stimulus measures by the European Central Bank (ECB).
The central bank reduced its key interest rates. The refinancing
rate was lowered to 0.15% from 0.25% and the marginal lending
facility rate was reduced to 0.40% from 0.75%. ECB also cut the
deposit rates to -0.10%; thereby becoming the first central bank to
have a negative rate.
Additionally, ECB deployed a series of targeted long term
refinancing operations in an effort to boost bank lending to the
non-financial private sector in the Eurozone. The ECB also
announced that it will halt sterilizing purchases under its
Securities Market Program. The program was launched in May 2010 in
order to relieve market tensions by purchasing government and
Separately, ECB President Mario Draghi said preparations for
outright purchases of asset-backed securities have begun. On
Monday, he had urged banks to be "particularly watchful" for any
"pernicious negative spiral" of low inflation rate and weak lending
rates derailing the eurozone's recovery.
Hedge fund manager David Tepper stated that the ECB's move partly
"alleviated" his concerns about the market. His comment enthused
investors since not long ago his views on the market had raised a
lot of concerns. In May, Tepper, the head of Apploosa Management
had said "it's nervous time" and added "I'm not saying go short,
I'm just saying don't be too fricking long right now."
Meanwhile, investors await the outcome of May's employment report,
which will be released on Friday. According to the consensus
estimate, total nonfarm payroll jobs are expected to come in at
213,000 and the unemployment rate will be 6.4%. In May, the U.S.
Bureau of Labor Statistics reported total nonfarm payroll
employment had risen to 288,000 in April. The economy added the
most number of jobs in April since January 2012. The unemployment
rate also dropped to 6.3% in April from 6.7% in March. This was its
lowest level since September 2008 and the biggest one-month decline
in 31 years.
Separately, initial claims were reported to have increased less
than expected last week. The U.S. Department of Labor reported that
seasonally adjusted initial claims increased 8,000 to 312,000 in
the week ending May 31. However, the rise was less than the
consensus estimate of initial claims increasing to 313,000.
Joy Global, Inc. (NYSE:
) advanced the most among the S&P 500 components after the
company reported better-than-expected second quarter 2014 results.
The company posted earnings per share of 76 cents, more than the
Zacks Consensus Estimate of 70 cents. Shares of Joy Global surged
The Industrial Select Sector SPDR (XLI) gained 1.0%, the highest
among the S&P 500 sectors. Key stocks from the sector such as
General Electric Company (NYSE:
), United Technologies Corp. (NYSE:
), Union Pacific Corporation (NYSE:
), The Boeing Company (NYSE:
), 3M Company (NYSE:
) and Caterpillar Inc. (NYSE:
) increased 0.8%, 0.9%, 1.3%, 1.1%, 1.0% and 2.5%, respectively.
The Financials sector followed the Industrial sector. The sector
advanced 0.9%. Top holdings from the sector such as Wells Fargo
& Company (NYSE:
), JPMorgan Chase & Co. (NYSE:
), Bank of America Corporation (NYSE:
), Citigroup Inc. (NYSE:
) and American Express Company (NYSE:
) increased 1.2%, 1.7%, 1.5%, 1.6% and 1.1%, respectively. Overall,
all the 10 sectors of the S&P 500 ended in the green.
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