Wall Street rallies on ECB decision, drop in jobless claims; Facebook climbs
U.S. stocks were revived Thursday after the previous session's losses, as markets rallied on after the European Central Bank cut its key interest rate, and as U.S. initial jobless claims fell to their lowest level in more than five years.
Tech stocks also helped the advance, with Facebook climbing more than 3.8% as first quarter revenue topped analysts' estimates.
As of half past noon ET, the Dow was up 109 points at 14,811, the Nasdaq climbed 36 points to 3,335, and the S&P 500 rose 13 points to 1,596.
The ECB this morning cut its key interest rate by 25 basis points to 0.5% as expected. This came a day after the U.S. Federal Reserve left its benchmark interest rate unchanged, also meeting expectations, while the Fed stood by its $85 billion in monthly bond purchases. However, the U.S. central bank also left room for changes, as it said it is prepared "to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes", hedging against recent soft economic data.
Data from the U.S. today, however, showed that initial jobless claims for the week that ended April 27 fell to 324,000 from a slightly upward revised 342,000 the previous week. The latest figures were far better than expected, as claims were expected to rise slightly to 345,000, boding well for the all important monthly jobs report due out tomorrow.
The report on Friday is expected to show the unemployment rate stayed at 7.6% and the economy created 135,000 jobs, after a weak rise of 88,000 in payrolls in March.
Meanwhile, the U.S. international trade gap narrowed more than expeced in March to $38.8 billion, from $43.6 billion in February. And finally, productivity rose less than expected in the first three months of the year, up 0.7%, compared to consensus forecasts for a 1.3% increase, but still better than the 1.7% drop in the previous quarter.
On the earnings front, Facebook (NASDAQ:FB) climbed 3.8% after the company reported late Wednesday a higher first quarter net profit on increased revenue, with adjusted earnings meeting estimates. Revenue of $1.46 billion, up from $1.06 billion a year earlier, also topped analysts' forecasts for sales of $1.44 billion. The social network's total monthly active users rose to 1.11 billion as of the end of the quarter - up 23% from the year earlier period - slightly slower than growth in the fourth quarter, when the company reported a 25% rise in monthly active users. Still, monthly mobile active users jumped 54%, with mobile now making up 30% of Facebook's total advertising revenue.
Yelp (NYSE:YELP), a consumer review website, surged more than 25% to an all-time high after reporting first-quarter revenue that topped estimates, driven by an expansion into new markets and a jump in local advertising. It also predicted better-than-expected sales in the second quarter.
In computers stocks, Intel Corp. (NASDAQ:INTC) was swinging between gains and losses after the technology giant named chief operating officer Brian Krzanich as its chief executive officer to replace Paul Otellini who is retiring this month.
Seagate Technology Inc. (NASDAQ:STX) stretched this year's gains, adding 7.7% as the hard disk manufacturer on Wednesday reported third-quarter adjusted earnings of $1.26 a share on revenue of $3.53 billion, which were in line with analysts’ expectations.
General Motors (NYSE:GM) said its first quarter profit fell, but less than expected, as revenue dropped to $36.88 billion from $37.76 billion a year earlier. Shares gained more than 4.4% on Thursday.
Estee Lauder Cos (NYSE:EL) also rose 2.7% after the beauty products company reported a sharply higher third quarter profit, well topping Street views, as quarterly revenue rose to $2.29 billion from $2.25 billion a year earlier. The cosmetics company also raised its full year earnings view.
Gold futures surged $22 to $1,468 an ounce on Thursday after the ECB rate cut, while crude futures leapt $2.13, or 2.3%, to $93.16 a barrel after the Europe news and U.S. jobless claims data stoked hopes for energy demand.
European markets finished higher today with shares in Germany leading the region. The DAX gained 0.61% while Britain's FTSE 100 rose 0.15% and France's CAC 40 advanced 0.05%.