Stocks soar after European Central Bank unveils bond-buying plan
NEW YORK — Investors brushed aside immediate worries over Europe and plowed $325 billion back into stocks.
The European Central Bank’s plan to buy bonds of debt-saddled countries such as Greece, Spain and Italy sent U.S. stock markets roaring up 2% to four-year highs Thursday after weeks of light summer trading. Investors have worried the Eurozone would fall apart as the monetary union’s debt crisis drags on.
Investors cheered the ECB move. The Dow Jones industrial average shot up 244.52 points, or 1.9%, to 13,292 — a level not seen since December 2007, the month the Great Recession officially began. The broader Standard & Poor’s 500 index gained 28.68 points, or 2%, to 1,432. The Nasdaq composite index was up 66.54 points, or 2.2%, to 3,136.
“In the near term, it’s taken a European collapse virtually off the table,” said Randy Frederick, a managing director at Charles Schwab in Austin, Texas. “In the long term it’s greatly diminished that” possibility.
Wall Street also got a boost from a report suggesting better-than-expected U.S. job gains in August. Automatic Data Processing, a payroll processing firm that tracks employment, said by its measure private-sector employers added 201,000 jobs last month — the biggest gain in five months.
Stocks have been flirting with five-year highs, but Frederick doesn’t think the market will reach those levels this year. The U.S. presidential election and looming “fiscal cliff” — tax increases and spending cuts that will automatically go into effect without congressional action — are the next major hurdles.
“It’s just too early to call that right now,” Frederick said.
