U.S. stocks leap on pledge from ECB's Draghi
NEW YORK (MarketWatch) -- U.S. stocks rallied Thursday, lifting the Dow Jones Industrial Average to its best day of the month and into positive terrain for the week, after the European Central Bank signaled its intention to preserve the euro.
The market is rallying amid "short-covering on questionable promises from the ECB President Mario Draghi. You wonder whether or not he is referring to keeping the euro as the euro, or is he trying to play politics with his words," said Robert Pavlik, chief market strategist at Banyan Partners LLC.
The ECB leader suggested that policy makers could step into bond markets as rising yields in Spain and Italy threatened to unravel the 17-nation euro zone. Read more on Draghi.
"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro," he said at an investor conference.
Bond yields in Spain and Italy plunged, temporarily removing a recent drag on sentiment. Spain's 10-year note yield fell back under 7%.
"It's hard to tell whether he's hoping to encourage [the] market with what amounts to meaningless promises, or whether they've really changed their perspective on how much liquidity they are willing to provide," said Bruce McCain, chief investment strategist at Key Private Bank.
Extending gains into a second session, the Dow Jones Industrial Average (DJIA) rose 211.88 points, or 1.7%, to 12,887.93, with the blue-chip index up 0.5% for the week.
In its first positive finish in five, the S&P 500 Index (SPX) climbed 22.13 points, or 1.7%, to 1,360.02. That was also the S&P 500's best day of the month.
Telecommunications shares led gains that included all of its 10 sectors.
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The Nasdaq Composite Index (COMP) advanced 39.01 points, or 1.4%, to 2,893.25.
Shares of
Facebook shares dropped 8.5%, their worst day since late May, ahead of the social network's quarterly report after the close. See a preview of Facebook's earnings.
For every stock falling, nearly three gained on the New York Stock Exchange, where 897 million shares traded. NYSE composite volume topped 4 billion.
Gold prices (GCQ2) rose for a second session, climbing $7 to $1,615.10 an ounce on the Comex division of the New York Mercantile Exchange. Crude-oil futures (CLU2) rose 42 cents to $89.39 a barrel. Read more on oil futures.
The day's data contained signs of improvement in the job market and manufacturing but a slowdown in housing. The National Association of Realtors reported its index of pending home resales fell 1.4% in June, illustrating lackluster momentum in the housing market.
First-time applications for jobless benefits declined more than expected last week, down 35,000 to 353,000. Read more on jobless claims.
Another report had orders for durable goods rising for a second month, up 1.6% in June.Read more on durable goods.
"Certainly the markets today illustrate the power of hope over shorter-term statistics. We don't see again anything in the statistics that indicate recession is looming; it's been the potential black hole of Europe," said McCain.
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