Share “Stocks head higher after ECB takes new steps”

Stocks head higher after ECB takes new steps

Published on NewsOK Modified: June 5, 2014 at 3:38 pm •  Published: June 5, 2014
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NEW YORK (AP) — New steps from the European Central Bank to revive the region's flagging economy gave markets a lift Thursday, pushing the Standard & Poor's 500 index to another record high.

In the U.S. market, the gains were broad but modest. All 10 industries in the S&P 500 crept higher, led by industrial companies and banks.

The ECB cut two key interest rates, pushing one of them below zero. The unusual move means that the ECB will charge banks to hold their money, instead of paying them interest. The goal is to arm-twist banks into lending money rather than stockpiling it.

Mario Draghi, the ECB's president, said the bank was willing to take more steps to support the region's economy if needed, including buying bonds.

"It's a big step by Draghi," said Jason Pride, director of investment strategy at Glenmede Trust. "I would say it's a big thing even though the markets may have expected it."

The Standard & Poor's 500 index rose 12.58 points, or 0.7 percent, to close at 1,940.46.

The Dow Jones industrial average rose 98.58 points, or 0.6 percent, to 16,836.11. The Nasdaq composite gained 44.58 points, or 1.1 percent, to 4,296.23. Both the S&P 500 and the Dow average are at record-high levels.

Germany's main stock index, the DAX, touched a record high before pulling back and ending the day with a gain of 0.2 percent. France's CAC 40 surged 1.1 percent.

"The world looks to be a safer place today," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York, in a note to clients. "If you lend money out, the ECB has money for you."

The U.S. and Europe are tightly connected through financial markets, the banking system and trade. Added together, the countries in the European Union make up the world's second-largest economy and buy roughly a fifth of all U.S. exports. Coca-Cola and other large corporations have blamed Europe's weak economy for hurting sales.

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