Stocks Close Higher on European Stimulus, Job Outlook
NEW YORK ( TheStreet) -- Stocks rallied Thursday as the European Central Bank lowered interest rates in a sign that policymakers are willing to take further actions to revive their moribund economies while investors embraced reports that showed improvement in U.S. employment.
The S&P 500 gained for the third time in four days, rising 0.94% to 1,597.59 while the Dow Jones Industrial Average was up 0.89% to 14,831.58 and the Nasdaq advanced 1.26% to 3,340.62.
The European Central Bank cut its benchmark rate by 25 basis points to a record low 0.5%, after holding the rate at 0.75% since July 2012. Mario Draghi, the president of the European Central Bank, sought to assuage concerns that policymakers were not doing enough to jump-start growth in many of the region's long-suffering economies. "Our monetary policy stance will remain accommodative for as long as is needed," he said.
"We're going back and forth obviously because of a little bit of a disconnect between economic news and corporate news," said Brian Amidei, managing director and partner at HighTower Palm Desert. "I think the biggest problem with the market is not necessarily profits ... the problem is revenues -- most revenues have been coming in short."
Signs of some improvement in U.S. employment came from outplacement firm Challenger, Grey & Christmas which reported that job cuts plunged to a four-month low of 38,121 in April.
The Labor Department additionally reported Thursday that initial jobless claims fell 18,000 to 324,000 in the week ended April 27. The four-week moving average on initial claims also fell, down16,000 from the previous week. On average, economists expected weekly claims to rise to 345,000 last week.
The Census Bureau said the U.S. trade deficit shrank to $38.8 billion in March from $43.6 billion in February, compared with expectations of a reduction to $42 billion.
"Things in the U.S. have been improving," said Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Pa. "We got the
Logan said that Thursday's jobless claims report showed a reassuring downward trend. "The jobs market is not robust or great, but it's not getting worse, and that has an important effect on confidence on as well," he said.
The reports also bolstered commodities as June gold futures were surging $19.40 to $1,465.60 an ounce and June crude oil futures were up 65 cents to $91.68 a barrel.
Harman International Industries