Benchmarks ended higher on Thursday banking on ECB's indication to extend stimulus measures, positive earnings results and upbeat economic data. Mario Draghi's intention to boost growth in Eurozone and bring inflation to the desired level lifted investor sentiment. His remarks helped the Dow post its biggest one day percentage gain since Sep 8.
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The Dow Jones Industrial Average (DJI) rose 1.9% or 320.55 points, to close at 17,489.16. The Standard & Poor's 500 (S&P 500) gained 1.7% to close at 2,052.51. The tech-laden Nasdaq Composite Index closed at 4,920.05, increasing 1.7%. The fear-gauge CBOE Volatility Index (VIX) plunged 13.5% to settle at 14.45. A total of around 112 million shares were traded on NYSE on Thursday. Advancers outpaced declining stocks on the NYSE. For 73% stocks that advanced, 25% declined.
European Central Bank President Mario Draghi's dovish comments had a positive impact on the broader markets on Thursday. He indicated that the central bank could expand its quantitative easing measures at its December meeting. He would re-examine monetary policy since he believes that economic recovery and inflation in Eurozone will be adversely affected by slow growth in emerging economies. He added that the Governing Council is willing to utilize all possible easing measures, including a further cut to the deposit rate.
On the domestic front, upbeat earnings results also boosted the broader markets. Dow components McDonald's Corp. ( MCD ) and 3M Company ( MMM ) posted better-than-expected quarterly results. McDonald's reported third quarter earnings per share of $1.40 that beat the Zacks Consensus Estimate of $1.27. 3M Company also posted third quarter earnings per share of $2.05, beating the Zacks Consensus Estimate of $2.01. However, revenues of $$7,712 million lagged the Zacks Consensus Estimate of $7,895 million. Shares of McDonald's and 3M Company soared 8.1% and 4.1%, respectively.
Another Dow component, Caterpillar Inc.'s ( CAT ) third quarter earnings per share of 75 cents came in line with the Zacks Consensus Estimate. However, revenues of $10.96 billion were short of the Zacks Consensus Estimate of $11.11 billion. Nevertheless, shares of Caterpillar gained 2.9%.
The Dow Chemical Company's ( DOW ) shares surged 5.1% after the company posted third quarter earnings per share of 82 cents that came in ahead of the Zacks Consensus Estimate of 68 cents. However, revenues fell short of the Zacks Consensus Estimate. Shares of eBay Inc. ( EBAY ) climbed 13.9% after the company reported third quarter earnings per share of 35 cents, beating the Zacks Consensus Estimate of 33 cents. Revenues of $2.1 billion also narrowly beat the Zacks Consensus Estimate of $2.098 billion.
Positive economic data too helped benchmarks close in the green on Thursday. The U.S Department of Labor reported that seasonally adjusted initial claims increased 3,000 to 259,000 in the week ending Oct 17. However, this compared favorably with the consensus estimate of initial claims increasing to 267,500. The four-week average of initial claims touched its lowest level in four decades. The 4-week moving average decreased 2,000 from previous week's level to 263,250.
Separately, the National Association of Realtors reported existing home sales rose 4.7% to a seasonally adjusted annual rate of 5.55 million in September from August's downward-revised figure of 5.3 million. Existing home sales beat the consensus estimate of 5.36 million.
Thursday's gains were broad based with 11 out of 12 sectors of the S&P 500 ending in the green. The Industrial Select Sector SPDR (XLI) gained 2.8%, the highest among the S&P 500 sectors. Key stocks from the industrial sector such as The Boeing Company ( BA ), General Electric Company ( GE ), Union Pacific Corporation ( UNP ) and Honeywell International Inc. ( HON ) increased 3.6%, 2.5%, 3.9% and 3.9%, respectively.
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