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 [strong] housing pricing numbers [Tuesday], and things in general have been positive on the real estate market, which clearly bottomed in 2012 and has been trending positive ever since." 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 ( HAR) popped 8.2% to $47.83 after the audio systems maker raised its full-year earnings outlook to $3 a share, up from its prior guidance of $2.70 to $2.90 a share. It also guided revenue toward the mid- to high-end of its previously announced range of $4.18 billion to $4.25 billion. Quanta Services ( PWR ) was a big advancer, up 6% to $28.63, after the specialty contracting services provider produced better-than-expected first-quarter results as backlogs surged to $7.04 billion. Jim O'Neil, CEO of Quanta Services, said in a statement that "we expect the performance of our electric power segment to remain strong this year while our natural gas and pipeline segment builds momentum throughout the remainder of 2013." Expeditors International of Washington ( EXPD ) jumped 4.8% to $37.03 after the logistics services company said Wednesday that airfreight tonnages were up for second straight quarter and that the Seattle-based company is "increasingly confident about our ability" to address global economic uncertainties. Expeditors reported first-quarter results Wednesday that were in line with expectations. Lincoln National Corp. ( LNC ) slumped 4% to $31.98 after the company, which operates insurance and retirement businesses, missed first-quarter expectations Wednesday. The Radnor, Penn-based company posted first-quarter earnings of $1.02 a share on revenue of $2.93 billion, falling short of the average analyst earnings estimate of $1.10 a share on revenue of $2.95 billion. Follow @atwtse Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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