Stocks soar after ECB unveils bond buying effort
Thursday, September 6, 2012
NEW YORK (AP) — The last time the stock market was this high, the Great Recession was just getting started and stocks were pointed toward a head-first descent.
But on Thursday, the market moved swiftly in the other direction. The Standard & Poor’s 500 index soared to its highest level since January 2008, and the Dow Jones industrial average hit its highest mark since December 2007.
A concrete plan to support struggling countries in Europe provided the necessary jolt, and the gains were extraordinarily broad. European markets surged and U.S. Treasury bond prices dropped as traders sold low-risk investments. All but 13 stocks in the S&P 500 index rose.
“There’s just a sea of green,” said JJ Kinahan, TD Ameritrade’s chief derivatives strategist. “It’s pretty fun.”
At a long-awaited meeting Thursday, Mario Draghi, the president of the European Central Bank, unveiled a new program to buy government bonds from the region’s struggling countries with the aim of lowering their borrowing costs. Draghi said the program will have no set limit on how much it can buy.
The Standard & Poor’s 500 index soared 28.68 points to close at 1,432.12. The Dow jumped 244.52 points to 13,292.
The Nasdaq composite index also reached a milestone, gaining 66.54 points to 3,135.81. That’s its highest level in 12 years.
European stock markets soared in response to Draghi’s announcement. Germany’s DAX and France’s CAC-40 each rallied 3 percent.
Traders shifted money out of U.S. Treasury bonds, considered one of the world’s safest places to stash money, and the drop in demand lifted yields. The yield on the 10-year Treasury note rose to 1.67 percent, up from 1.60 percent late Wednesday.