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Tuesday, November 30, 2021

Wall Street stocks gain as ECB says it’s ready to act

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US stocks moved slightly higher as markets calmed after a recent bout of turmoil.

Investors on Thursday were encouraged by comments from European Central Bank policymakers, who said they were willing to provide more stimulus to the region’s economy, if needed.

Investors now turn to today, when a key jobs report will be released that could help determine whether or not the Federal Reserve raises interest rates this month.

“There’s a lot of trepidation in the market over what the Fed will do, and it’s only getting worse as we get closer to the meeting,” said Kristina Hooper, head of investment strategies at Allianz Global Investors.

The Fed’s two-day meeting begins on September 16.

The Dow Jones industrial average added 23.38 points, or 0.1%, to 16,374.76. The Standard & Poor’s 500 index rose 2.27 points, or 0.1%, to 1,951.13 and the Nasdaq composite fell 16.48 points, or 0.4%, to 4,733.50.

Stocks started Thursday solidly higher, but momentum waned as the day dragged on. Major indexes dipped briefly into the red by mid-afternoon before ending mostly higher.

Investors were initially encouraged by news from the European Central Bank, where President Mario Draghi said it is ready to give the eurozone a bigger dose of stimulus should inflation across the 19-country bloc fail to pick up.

Along with keeping interest rates low, the ECB is pumping €60bn a month into the region’s economy through purchases of government and corporate bonds. The programme is slated to run at least through September 2016.

“Draghi said in 2012 he would do whatever it takes to grow the eurozone economy and he’s holding to that promise,” said Quincy Krosby, a market strategist at Prudential Financial.

European markets jumped on the news. Germany’s DAX closed up 2.7%, France’s CAC-40 rose 2.2% and UK’s FTSE 100 rose 1.8%.

At the same time the ECB is stimulating Europe’s economy, the Federal Reserve could raise US interest rates for the first time since the financial crisis.

While the chances of a September interest rate increase have diminished because of signs of weakening global growth and a sell-off in Chinese stocks, many believe the growing US economy may be ready to withstand higher interest rates.

Friday’s jobs report for August, a key gauge of how the US economy is doing, could play a big role in guiding that decision by the Fed.

Economists are forecasting that employers created 220,000 jobs last month and that the unemployment rate fell to 5.2%.
The price of oil followed the stock market higher. US crude rose 50 cents to close at 46.75 dollars a barrel in New York.

Brent crude, a benchmark for international oils used by many US refineries, rose 18 cents to close at 50.68 dollars a barrel in London.

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