Stock Market News for September 7, 2012 - Market News
07 Setembro 2012 - 6:06AM
Zacks
Benchmarks soared to new multi-year
highs on Thursday following news that the ECB had agreed on a bond
purchase plan that will strive to combat the region’s intensifying
debt crisis. Separately, jobs data on the domestic front was
positive, helping markets widen their gains. Eventually, the Dow
was at its best level since 2007, the S&P 500 hit the highest
mark since 2008, and the Nasdaq soared to its biggest level since
2000.
The Dow Jones Industrial Average
(DJI) soared 244.52 points or 1.9% to end at 13,292.00. The
Standard & Poor 500 (S&P 500) surged almost 2.1% to finish
yesterday’s strong rally at 1,432.12. The tech-laden Nasdaq
Composite Index surged 2.2% to close at 3,135.81. Amidst such
robust gains, the 12.1% slump in the fear-gauge CBOE Volatility
Index (VIX), which settled at 15.60, further reflected investors’
confidence. Total volume on the New York Stock Exchange was 3.96
billion shares. Advancers easily outnumbered declining stocks
on the NYSE; as for 77% stocks that gained, only 20% stocks closed
lower.
Benchmarks last witnessed such high
levels long ago when the recession had just begun around four years
ago. In fact, the Nasdaq jumped to levels it last witnessed in
2000, during the Dotcom bubble. These new multi-year highs were
primarily due to what European Central Bank (ECB) President Mario
Draghi had to announce.
Following the ECB meeting, Mario
Draghi said the ECB has agreed to buy back government bonds of
embattled Euro-zone nations. Draghi said: “The Governing Council
decided on the modalities for undertaking Outright Monetary
Transactions (OMT) in secondary markets for sovereign bonds in the
euro area”. The bond purchase would help nations such as Italy and
Spain to control their burgeoning borrowing costs.
The central bank is aiming to
restore the ‘singleness’ of its monetary policy. Speaking at a
press conference in Frankfurt, Draghi stated that “OMTs will enable
us to address severe distortions in government bond markets, which
originate from, in particular, unfounded fears on the part of
investors of the reversibility of the euro”. The onus lies on the
countries’ governments now, as they will have to seek help from
Europe’s rescue funds. Draghi said: “"Governments must stand ready
to activate the EFSF/ESM in the bond market when exceptional
financial-market circumstances and risks to financial stability
exist - with strict and effective conditionality”.
While the new bond purchase plan
sparked off a strong rally, positive domestic jobs data also played
a key role in ensuring that benchmarks achieved new multi-year
highs. While the U.S. Department of Labor announced a
bigger-than-expected drop in initial claims; Automatic Data
Processing, Inc.’s (NASDAQ:ADP) National Employment Report revealed
that US companies added jobs at the fastest pace in five months in
August.
According to the Labor Department’s
report, the advance figure for seasonally adjusted initial claims
was at 365,000 during the week ending September 1, down 12,000 from
prior week. Consensus estimates had projected initial claims to
come in at 372, 000. While initial claims data lifted sentiment,
the ADP National Employment Report revealed that U.S. nonfarm
private business sector employment jumped 201,000 from July to
August. According to the report: “Employment in the private,
service-providing sector expanded 185,000 in August, up from
156,000 in July. Employment in the private, goods-producing sector
added 16,000 jobs in August. Manufacturing employment rose 3,000,
following an increase of 6,000 in July”.
Coming to the individual sectors,
the financial sector was a major gainer and the Financial Select
Sector SPDR (XLF) soared 2.4%. Among the stocks, Goldman Sachs
Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM),
Citigroup Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC), U.S.
Bancorp (NYSE:USB), Morgan Stanley (NYSE:MS) and Charles Schwab
Corp (NYSE:SCHW) jumped 3.3%, 4.3%, 4.5%, 3.2%, 2.6%, 3.6% and
4.7%, respectively.
AUTOMATIC DATA (ADP): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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