U.S. markets rebound on central bank announcements, jobs data
U.S. stocks continued their climb late into Thursday's session as markets rallied after the European Central Bank cut its key interest rate as expected, and as U.S. initial jobless claims fell to their lowest level in more than five years, boosting hopes for tomorrow's monthly jobs report.
The Dow was up 128 points at 14,830 within a half an hour of market close, after dropping 138.85 points in the previous session, almost regaining its prior day losses.
The Nasdaq was up 43 points to 3,342, and the S&P 500 gained 15 points to 1,598.
The ECB this morning cut its key interest rate by 25 basis points to 0.5% as expected, while ECB president Mario Draghi said the central bank is prepared to act even further if necessary.
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 5.7% 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 24% 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) rose 0.6% after the technology giant named chief operating officer Brian Krzanich as its chief executive officer to replace Paul Otellini who is retiring this month, with analyts believing that the pick from inside the company suggests Intel will focus on its core manufacturing strengths in the future.
Seagate Technology Inc. (NASDAQ:STX) stretched this year's gains, adding 8% 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 3.4% on Thursday.
Estee Lauder Cos (NYSE:EL) also rose 3% 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.
Crude oil for June delivery climbed $2.96 to end at $93.99 a barrel on the New York Mercantile Exchange, as the ECB rate cut and U.S. initial jobless claims data boosted hopes for energy demand. Gold futures also drew support from the central bank decisions, with the June contract adding $21.40, or 1.5%, to settle at $1,467.60 an ounce on the Comex division of the New York Mercantile Exchange.
European markets finished higher today with shares in Germany leading the region. The DAX rose 0.61% while Britain's FTSE 100 added 0.15% and France's CAC 40 advanced 0.05%.