Stocks rise as ECB President hints at monetary stimulus
US stocks climbed to record levels for the second straight day on Thursday, 06 November 2014 after European Central Bank president Mario Draghi hinted at monetary stimulus of as much as 1 trillion. Better-than-expected jobless claims data as well as productivity report also served to drive the markets higher.
The Dow Jones Industrial Average gained 69.94 points, or 0.4%, to 17,544.47. The Nasdaq Composite closed 17.75 points, or 0.4%, higher at 4,638.47. The S&P 500 added 7.64 points, or 0.4%, to 2,031.21, with energy and industrial sectors leading the gains.
Equity indices registered modest gains on Thursday ahead of the Nonfarm Payrolls report for October which will be released tomorrow. The key indices spent the entire session in a slow and steady climb off their opening lows, but the same could not be said for the greenback.
The energy sector ended in the lead despite showing early weakness. The sector climbed to highs during the final hour of the session, rising above the industrial space which led for the bulk of the day.
Industrials received strong support from General Electric spiked 2.1%. Elsewhere among cyclical sectors, consumer discretionary and materials displayed strength while financials and technology sectors lagged.
Technology sector spent the day in negative territory after Qualcomm reported disappointing results and shares plunged 8.6%.
The Dollar Index spiked 0.7% after the European Central Bank released its latest policy statement. Although the central bank did not announce any changes, the euro tumbled below 1.2380 against the dollar after Mario Draghi said the bank will begin purchases of asset-backed securities soon and will not hesitate to introduce additional easing if needed. The reminder of willingness to consider additional measures boosted European equities and helped U.S. futures climb off their overnight lows.
Economic data at Wall Street included Initial Claims, Productivity/Labor Cost data, and Challenger Job Cuts. Nonfarm labor productivity increased 2.0% in the third quarter, down from an upwardly revised 2.9% (from 2.3%) gain in the second quarter. The consensus expected an increase of 1.5%. Output growth decelerated in the third quarter, increasing 4.4% after a 5.5% increase in the second quarter, which was in-line with third quarter GDP growth. The relatively weaker output level resulted in a modest acceleration in unit labors costs, up 0.3% after declining 0.5% in Q2 2014.
Initial Claims declined to 278,000 from a revised rate of 288,000 (from 287,000), while the consensus expected a reading of 285,000. Claims have held below the 300,000 mark for the past several weeks, setting expectations for relatively strong job growth Separately, the Challenger Job Cuts report for October rose 11.9% to follow the prior decline of 24.4%.
Bullion prices ended lower on Thursday, 06 November 2014 at Comex. Gold extended its losing streak for a seventh session on Thursday, though declines were held in check relative to the prior session's sharp drop. Gold for December delivery slid $3.10 to settle at $1,142.60 an ounce. December silver dropped another 3 cents to $15.41 an ounce.
Crude-oil futures fell further on Thursday, 06 NOvember 2014 at Nymex after the Organization of the Petroleum Exporting Countries cut demand forecasts for its oil and investors worried about the health of the eurozone's economy. Oil futures snapped a four-session losing streak on Wednesday after the weekly U.S. supply report showed an smaller-than-expected increase in inventories.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December fell 77 cents, or 1%, to settle at $77.91 a barrel. It is down for five out of the past six sessions and off nearly 30% from a June peak.
Treasuries ended on their lows with the 10-yr yield up four basis points at 2.38%.
Participation was ahead of average with more than 730 million shares changing hands at the NYSE floor.
Tomorrow, the October Nonfarm Payrolls report (consensus 235,000) will be released at 8:30 ET while the Consumer Credit report for September (consensus $16.00 billion) will cross the wires at 15:00 ET.
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