US stocks rally as ECB’s QE lives up to hype

U.S. stocks climbed on Thursday after the European Central Bank left benchmark interest rates unchanged and ECB President Mario Draghi said the central bank would make monthly bond purchases of $70 billion.

“We’re pleased. There was always concern the ECB would disappoint, so we’re pleased with size of the proposed actions, and the structure of it. There are moving parts, but overall it’s good news,” John De Clue, chief investment officer at the private client reserve at U.S. Bank Wealth Management.

The expanded asset purchases begin in March, and run through September of next year, Draghi said.

Dow futures jumped more than 160 points right after the ECB announcement, before scaling back.

“It was telegraphed for so long that they were going to do something in terms of QE. Investors are skeptical about how effective QE is anyway. Our economy is doing better, but that’s because of the energy situation here; we own it,” Bruce Bittles, chief investment strategist at RW Baird, said.

“Our economy didn’t respond to low interest rates and three rounds of quantitative easing, but it did respond to gasoline prices dropping by a third,” said Bittles, not an advocate of the Federal Reserve’s monetary policy.

Stock futures had retained solid gains after U.S. data had 307,000 Americans filing for jobless benefits last week, down 10,000.

Verizon Communications edged lower after the telecom reported quarterly earnings in line with estimates; Southwest Airlines rose after the carrier posted quarterly earnings and revenue above estimates; American Express fell, a day after the credit-card company said it would cut more than 4,000 jobs this year, and eBay climbed a day after the online auctioneer said it was exploring a sale or public offering of its enterprise unit.

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DJIA Dow Jones Industrial Average 17666.11
111.83 0.64%
S&P 500 S&P 500 Index 2045.57
13.45 0.66%
NASDAQ Nasdaq Composite Index 4703.78
36.36 0.78%

After falling 71 points and jumping 155, the Dow Jones Industrial Average was lately up 147.61 points, or 0.8 percent, at 17,701.89, with Goldman Sachs Group leading blue-chip gains that extended to 23 of 30 components.

The S&P 500 gained 18.22 points, or 0.9 percent, to 2,050.34, with financials leading sector declines and industrials faring best among its 10 major industries.

The Nasdaq rose 40.31 points, or 0.9 percent, to 4,707.71.

For every share falling, three rose on the New York Stock Exchange, where 227 million shares traded as of 10:55 a.m. Eastern. Composite volume hit 1.1 billion.

After rising above $49 a barrel early Thursday, the price of U.S. crude fell 77 cents, or 1.6 percent, to $47.01 a barrel. Gold futures fluctuated, lately up $6.10, or 0.5 percent, to $1,299.80 an ounce.

“Perhaps the worst in energy is behind us,” Dan Greenhaus, chief strategist at BTIG, wrote in emailed commentary, noting the sector has risen 5.2 percent in the last three sessions, and led Wall Street gains on Wednesday.

The U.S. dollar rose against other global currencies, and the yield on the 10-year Treasury note dropped a basis point at 1.8676 percent.

On Wednesday, U.S. stocks advanced, with Wall Street’s volatility unabated, as investors largely adopted the view that the European Central Bank would implement a large-scale bond-purchasing program.

Read More Stocks gain for third day; longest win streak of 2015

Brendan McDermid | Reuters Trader on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters
Trader on the floor of the New York Stock Exchange.

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