Wall Street Climbs Higher on ECB Rate Cut
Wall Street climbed higher on Thursday after the ECB (European Central Bank) made the decision to cut its key interest rates and boost its stimulus program. A fall in energy stocks put a cap on gains.
The ECB lowered rates deeper into negative territory while increasing its asset-purchasing program to 80 billion euros a month. The moves are the central bank’s latest effort to stimulate the euro zone’s economy.
Crude prices dropped 2% on news that a proposed meeting between OPEC and non-OPEC producer Russia is unlikely to take place on March 20 as Iran had not agreed to participate.
The Dow Jones was up 43.18 points (0.25%) to 17,043.54, while the Nasdaq Composite climbed 24.23 points (0.52%) to 4,698.61. The S&P 500 gained 6.34 points (0.32%) at 1,995.6.
Of the 10 major S&P sectors, nine were higher. Consumer discretionary and healthcare stocks led the advancers.
Apple (AAPL) boosted the S&P 500 and the Nasdaq on speculation that the company would be releasing a more budget-friendly iPhone this month. Goldman Sachs (GS) pushed the Dow higher.
Exxon (XOM) fell 1.4%, weighing on the Dow and S&P and capping gains.
Dollar General (DG) gained 6.4% to trade at $80 after reporting higher-than-expected same-store sales growth. Dollar Tree (DLTR) also saw gains, climbing 3%.
The number of advancing issues on the NYSE outpaced the decliners 1,760 to 881. The S&P 500 had 24 new 52-week highs and just one new low.
Economic data out of Europe and Asia show slow growth, but the U.S.’s recovery is been gaining momentum.
The Fed maintains that it is on track to raise rates gradually in 2016, but how often and how quickly will largely depend on the economy’s ability to absorb an increase amid global economic turmoil. The Federal Reserve’s next meeting is scheduled for March 15-16.
The ECB’s decision to cut rates further into negative territory may weigh on the Fed’s decision next week. While the bank notes that it can lower rates even further, it is unlikely to do so. On top of cutting rates, the ECB will also extend its asset buying program further.
Meanwhile in the U.S., jobless claims fell more than anticipated to a rate of 259,000 (seasonally adjusted) last week.
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