Stocks Close at Record Highs on ECB's Unprecedented Rate Cut
NEW YORK ( TheStreet) -- U.S. stock indices have broken free from treading water to soar to record heights Thursday as markets cheered the European Central Bank's unprecedented moves to help stimulate the eurozone economy.
The ECB on Thursday cut the refi rate to 0.15% and the marginal lending rate to 0.4% and decided in favor of slashing the deposit rate to negative territory for the first time, to -0.1%. The decision demonstrated the ECB's commitment to fighting a prolonged period of low inflation that has been adding to worries over a faltering economic recovery.
The S&P 500 closed 0.65% higher to 1,940.46, a record-making level after robust gains over the previous month. The Dow Jones Industrial Average was up 0.57% to 16,833.4. The Nasdaq increased 1% to 4,296.23.
A generally upbeat weekly U.S. initial jobless claims report added to positive sentiment Thursday. Weekly claims levels, though rising by 8,000 to 312,000 in the week ended May 31, remained near a cycle low, according to RBC economists. Meanwhile, the four-week moving average dipped to 310,250, the lowest for this average in seven years.A handful of individual stocks were spiking. Twitter (TWTR) was jumping 2.9% to $33.84 as The Financial Times reported that the micro-blogging platform has considered buying online music services including Soundcloud and Spotify in recent months. Medtronic (MDT) was down 1.7% to $62.13 as Bloomberg said it's evaluating a takeover of London-based Smith & Nephew that could see the U.S. company move its tax domicile overseas. Amazon.com (AMZN - Get Report) was up 5.5% to $323.59 as it asks customers to request an invitation to a launch event for an unspecified device on June 18 in Seattle. According to The Verge and other publications, the event is likely for the launch of a 3D smartphone that has been rumored for months. J.M. Smucker (SJM), the maker of jellies and jams, said Thursday that earnings in its fiscal fourth quarter fell 9% but adjusted profit of $1.21 a share beat Wall Street expectations. Shares were gaining 1.4%.
General Motors (GM - Get Report) shares were falling 0.74% after the automaker said a pattern of incompetence and neglect, not a larger conspiracy or cover-up, was to blame for a delayed recall of defective ignition switches. GM CEO Mary Barra said 15 employees closely involved with the defect have been let go. Among the worst-performing stocks of the day, Rite Aid (RAD) dropped 7.5% after guiding for first-quarter earnings of 4 cents a share, half what analysts had expected. Sprint (S) and T-Mobile (TMUS) were also slipping on reports terms of a merger deal are close to being finalized. A deal between the third- and fourth-largest U.S. telecom would likely come under intense scrutiny from federal regulators. --By Andrea Tse in New York
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