U.S. stocks rose, sending the Standard & Poor’s 500 Index toward a record high, as the European Central Bank cut its key interest rate and American jobless claims unexpectedly fell.
Chevron Corp. and Caterpillar Inc. rallied more than 1.5% to pace gains in the Dow Jones Industrial Average. Facebook Inc. added 5.7% as the operator of the world’s largest social network reported sales that topped projections. General Motors Co. rose 3.5% as it narrowed its loss in Europe. MetLife Inc. and Prudential Financial Inc. climbed more than 4.1% after the insurers’ earnings beat forecasts.
The S&P 500 advanced 1% to 1,597.85 at 3:42 p.m. in New York, erasing yesterday’s decline. The Dow gained 125.10 points, or 0.9%, to 14,826.05. Trading in S&P 500 stocks was in line with the 30-day average during this time of day.
“The ECB did the minimum it needed to do,” Michael Strauss, who helps oversee about $25 billion of assets as chief investment strategist at Commonfund Group in Wilton, Connecticut, said by telephone. “Are they way behind the curve? Yes, but it at least showed that they’re recognizing the economic deterioration in the euro zone. The announcement was widely expected but on the margin it provided some help and the jobless claims data provided some help.”
ECB policy makers meeting in Bratislava lowered the main refinancing rate to 0.5% from 0.75%, a move predicted by 45 of 70 economists in a Bloomberg News survey. “Our monetary policy will remain accommodative for as long as needed” and officials “will monitor very closely all incoming information” in the months ahead, ECB President Mario Draghi said at a press conference. He said the ECB will continue to lend banks as much money as they need at least until mid-2014.
Stock futures pared gains after Draghi said policy makers had an open mind on a negative deposit rate.
The S&P 500 lost 0.9% yesterday, the biggest drop in two weeks, as U.S. payrolls and manufacturing grew less than forecast. The bull market has entered its fifth year as the S&P 500 surged 136% from a 12-year low in 2009, driven by better-than-expected corporate earnings and three rounds of bond purchases by the Federal Reserve.
The Fed said yesterday it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as the economy changes.
The number of Americans filing claims for jobless benefits unexpectedly dropped to the lowest level in more than five years, Labor Department figures showed. Other data today showed the productivity of U.S. workers rose in the first quarter as companies focused on containing labor expenses.