US stocks register strong gains following ECB stimulus

Financials, technology and consumer discretionary sector stocks led the gains

U.S. stocks rose to session highs ahead of the close but ultimately closed with strong gains on Thursday, 22 January 2015 after the European Central Bank announced larger than expected measures to stimulate the region's sagging economy. The ECB will buy 60 billion euros worth of assets per month, more than markets had been hoping for, in a program that will last through September 2016. A late-afternoon rally pushed U.S. stocks to record their best gains in two weeks, as investors came to grips with the European Central Bank's long-awaited plan to initiate a bond-buying program intended to revive the slumping eurozone economy.

The Dow Jones Industrial Average jumped 259.70 points, or 1.5%, to 17,813.98. The Nasdaq Composite ended the day up 82.98 points, or 1.8%, at 4,750.40. The S&P 500 closed 31.03 points, or 1.5%, higher at 2,063.15.

Financials, technology and consumer discretionary sector stocks led the gains. Telecoms and utilities were the only sectors ending with losses.

Prior to the U.S. open, ECB President Mario Draghi revealed plans to purchase investment-grade corporate and government debt in the amount of EUR60 billion per month. According to Mr. Draghi, the program will continue through September 2016 and will be deployed 'decentrally,' meaning national central banks will participate in the risk sharing. When asked about the program's limits, Mr. Draghi said the take-up is limited to 25.0% of a given issue. The announcement boosted European debt (Italy 10-yr yield -14 bps to 1.55%) and weighed on the euro, sending the single currency lower by nearly 300 pips to 1.1340 against the dollar.

European bond markets rallied on the news, as did European and U.S. stock indexes. The rallying stock and European bond markets did take away some buying interest from the commodities.

The next big news event for the markets will be this weekend's much-anticipated Greek elections, which could determine if that country remains a member of the European Union.

U.S. economic data out Thursday included the weekly jobless claims report, the monthly house price index, the weekly DOE liquid energy stocks report, and the Kansas City Fed manufacturing survey. Those reports were overshadowed by the ECB news.

The initial claims level declined to 307,000 from an upwardly revised 317,000 (from 316,000) while the consensus expected a decline to 302,000. This was the first time since July 2014 that the initial claims level exceeded 300,000 for three consecutive weeks. As with last week, the Department of Labor reported that there were no special factors impacting the initial claims level. Continuing claims increased to 2.443 million from an upwardly revised 2.428 million (from 2.424 million).

The FHFA Housing Price Index for November rose 0.8%, which followed an increase of 0.6% in October

Among stocks under focus, Wells Fargo and Bank of America rose 2.9% and 4.9% respectively.

Verizon Communications was the largest points weight on the S&P 500, down 1.2% to $47.65 after swinging to a net loss in its latest quarter.

Bullion prices ended the U.S. day session with moderate price gains on Thursday, 22 January 2015. Safe-haven buying interest was featured in the aftermath of the European Central Bank's move to implement quantitative easing of its monetary policy. The QE package was more aggressive than market expected, which added some uncertainty to the market place Thursday.

February gold posted a modest gains with Feb gold rising $8.20 to $1301.50/oz. March silver gained $0.17 to $18.36/oz.

Today's participation was ahead of average with roughly 871 million shares changing hands at the NYSE floor.

Tomorrow's data will be limited to Existing Home Sales for December (consensus 5.10 million) and December Leading Indicators (consensus 0.5%). Both reports will be released at 10:00 ET.

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