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Stocks Hold Gains as Central Banks Coordinate Dollar Liquidity Efforts

Strategic Insights

— 2 min read

U.S. stocks edged higher Thursday after a coordinated effort by the European Central Bank, the Federal Reserve, and three other major central banks to boost dollar liquidity in Europe's struggling financial system. The move came as investors closely watched the European debt crisis and global economic indicators. Despite the positive reaction to the central banks' move, trading remained choppy, with investors continuing to fret about Europe's debt crisis and expressing concern that the short-term solution may ultimately forestall long-term reform.

Key Takeaways:

  • The Dow Jones industrial average rose 60 points, or 0.5%, with General Electric, JP Morgan, and Bank of America leading the blue-chip index higher.
  • The S&P 500 added 4 points, or 0.3%, and the Nasdaq ticked up 2 points, or 0.1%.
  • The move by the central banks was meant to boost dollar liquidity in Europe's struggling financial system, but investors remain cautious due to the ongoing European debt crisis.
  • German Chancellor Angela Merkel and French President Nicolas Sarkozy earlier in the week calmed jittery investors by insisting that Greece would remain a eurozone member and would achieve its fiscal targets.
  • The weekly report on initial claims for jobless benefits came in higher than expected, with claims rising to 428,000 in the latest week from 414,000 the previous week.
  • The Federal Reserve Bank of New York's Empire State Manufacturing Survey worsened to -8.9 in September, from -7.7 in August.
  • The Philadelphia Fed index showed manufacturing activity slowed in the mid-Atlantic area in September, although less than expected.
  • UBS shares traded in the U.S. plunged 10.8% after the Swiss bank reported about $2 billion in losses due to unauthorized trading.
  • Netflix shares fell 13.3% after reducing its forecast for third-quarter subscriptions in the United States.

Statistics:

  • The Dow Jones industrial average rose 60 points, or 0.5%.
  • The S&P 500 added 4 points, or 0.3%.
  • The Nasdaq ticked up 2 points, or 0.1%.
  • The dollar fell against the euro, the Japanese yen, and the British pound.
  • Oil for October delivery gained 52 cents to $89.43 a barrel.
  • Gold futures for December delivery fell $29.20 to $1,797.30 an ounce.
  • The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 2.1% from 2% late Wednesday.
  • The U.S. Consumer Price Index showed prices rose at an annual rate of 3.8% in August, the highest annual increase since 2008.
  • Initial claims for jobless benefits rose to 428,000 in the latest week from 414,000 the previous week.

Sources:

  • CNNMoney, "Stocks gain as central banks act to ease Europe's financial woes"
  • CNNMoney, "UBS says $2 billion in losses due to unauthorized trading"
  • CNNMoney, "Netflix shares fall after cutting US subscriber forecast"

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