While you were sleeping: ECB boosts sentiment

Wall Street advanced, pushing the Dow and the S&P 500 to record highs, after the European Central Bank announced plans for more stimulus in its efforts to bolster the flagging euro-zone economy.

ECB President Mario Draghi confirmed the central bank began purchasing covered bonds under a new program and will “soon” start to purchase asset-backed securities.

“The programs will last for at least two years,” he said in a statement. “Together with the series of targeted longer-term refinancing operations to be conducted until June 2016, these asset purchases will have a sizeable impact on our balance sheet, which is expected to move towards the dimensions it had at the beginning of 2012.”

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.26 percent, the Standard & Poor’s 500 Index added 0.17 percent, while the Nasdaq Composite Index increased 0.09 percent. 

Gains in shares of General Electric and those of Home Depot, up 1.6 percent and 1.5 percent respectively, led the Dow higher. The index touched a record high 17,538.32 earlier in the session. The S&P 500 also reached a record 2,027.35

"The European economy is getting worse, but Draghi presented a united front and said we can expect more action if necessary," Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, told Reuters.

"He brought more clarity but there's still more to come out, and it isn't healthy to focus on hopes for stimulus instead of fundamentals."

Europe’s Stoxx 600 ended the day with a 0.2 percent increase from the previous close, as did the UK’s FTSE 100 Index. France’s CAC 40 gained 0.5 percent, while Germany’s DAX rose 0.7 percent.

The euro weakened to the lowest level in more than two years against the greenback. It was last down 0.7 percent to US$1.2397 and 0.5 percent lower against the Japanese yen.

In contrast to the struggling euro-zone economy, there were more signs of strength in the US. First-time jobless claims fell more than expected, declining by 10,000 to 278,000 in the week ended November 1, according to the Labor Department. The four-week moving average dropped to the lowest level in more than 14 years.

A separate Labor Department report showed productivity increased at a 2 percent annual rate in the third quarter, following a 2.9 percent advance in the second quarter. Labour costs rose at a 0.3 percent pace in the third quarter, after declining at a 0.5 percent pace in the second quarter.

“The news on wage costs is good for the Fed overall because it gives us a sign of better prospects for the labour market and the numbers aren’t high enough to be problematic for inflation,” Michael Englund, chief economist at Action Economics in Boulder, Colorado, told Bloomberg News. “Many of the recent numbers have beat expectations and claims have led the march.”

In the latest earnings news, shares of Whole Foods Market rallied 10.5 percent after the company posted results that exceeded expectations.

However, shares Genworth Financial plunged 37.5 percent after the company posted a loss in its latest quarter and predicted a challenging road ahead.

“The turnaround in this business will be more difficult and prolonged,” Genworth Chief Executive Officer Tom McInerney said in a statement. “Despite this setback, we remain steadfast in our commitment to transform this business.”

Shares of Qualcomm sank 12 percent after the company warned an antitrust investigation in China, and regulatory investigations in the US and Europe might crimp sales and profit next year.

(BusinessDesk)