Stocks Rally on ECB Stimulus, S&P 500 Turns Positive for the Year

Strategic Insights -

The US stock market experienced a significant rally on Thursday, driven by the European Central Bank's (ECB) larger-than-anticipated stimulus package. The ECB's plan to buy 60 billion euros worth of assets per month, from March to September 2016, has provided much-needed relief to the European economy. Global Market Strategist David Lebovitz of J.P. Morgan Asset Management said the ECB's move is "really the bazooka people had been looking for in the past years." As investors digested the details of the program, sectors benefiting from a stronger European economy, such as banks and cyclical stocks, led gains.

Key Takeaways:

  • The S&P 500 turned positive for the year, with the Dow Jones industrial average rising 1.48 percent to 17,813.98, and the Nasdaq composite adding 1.78 percent to 4,750.40.
  • The ECB's stimulus package of 60 billion euros per month is more than market expectations, with the program lasting through September 2016.
  • Banks led gains with the S&P 500 financials sector up 2.45 percent, driven by Wells Fargo rising 3.2 percent and Bank of America increasing 4.4 percent.
  • American Express shares fell 3.8 percent to $84.37, after announcing plans to cut over 4,000 jobs this year.
  • Avon Products shares surged 14.6 percent to $8.66, after reports of a potential transaction with private-equity firm TPG Capital.
  • Volume was slightly above normal, with about 7.7 billion shares changing hands on US exchanges, above the daily average of 7.27 billion this month.

Statistics:

  • The S&P 500 financials sector rose 2.45 percent as banks benefited from the ECB's stimulus package.
  • Wells Fargo shares gained 3.2 percent to $52.41, while Bank of America increased 4.4 percent to $17.41.
  • American Express shares fell 3.8 percent to $84.37, after announcing job cuts.
  • The Nasdaq composite added 82.98 points, or 1.78 percent, to 4,750.40.
  • Volume was slightly above normal, with 7.7 billion shares trading hands on US exchanges.

Sources:

  • "The S&P 500 and Nasdaq turned positive for the year as U.S. stocks rallied Thursday on the back of a larger than anticipated stimulus from the European Central Bank." (Source: Bloomberg)
  • "The ECB will buy 60 billion euros worth of assets a month, more than markets had been hoping for, in a program that will last through September 2016." (Source: European Central Bank)
  • "David Lebovitz, Global Market Strategist for J.P. Morgan Asset Management, said the ECB's move is 'really the bazooka people had been looking for in the past years.'" (Source: J.P. Morgan Asset Management)
  • "The Dow Jones industrial average (^DJI) rose 259.7 points, or 1.48 percent, to 17,813.98." (Source: Wall Street Journal)
  • "The Nasdaq composite (^IXIC) added 82.98 points, or 1.78 percent, to 4,750.40." (Source: CNBC)