U.S. stocks rallied Thursday on news that the European Central Bank (ECB) plans to institute further bond buying—a long-rumored action—to prop up ailing Italy and Spain.
The Dow Jones Industrial Average jumped to its highest level since December 2007, before the height of the financial crisis. The Dow rose 244 points, or 1.9 percent, while the S&P 500 Index soared 28 points, or 2 percent.
The technology-heavy Nasdaq Composite Index jumped 2.2 percent. At 3,135 points, the Nasdaq index is at a 12-year high.
The market rally was broad-based, with all S&P sectors markedly higher by end of day trading Thursday. Markets overseas also gained, with the FTSE 100 in London gaining 2.1 percent, the DAX in Frankfurt higher by 2.9 percent, and the Paris CAC rose 3 percent.
On Thursday, ECB President Mario Draghi unveiled a new plan of unlimited bond purchasing from eurozone’s periphery countries, in an effort to bring down borrowing costs.
Traders sold off low-risk assets such as U.S. government bonds, as the yield on the 10-year Treasury note jumped to 1.67 percent, according to Bloomberg data.
Gold traded higher Thursday, in line with the euro strengthening against the dollar, with the spot price increasing by 0.5 percent to $1,701.50 per ounce in New York. Gold has been marginally higher since last month on expectations of another round of quantitative easing by the Federal Reserve.
Coming up, all eyes will be on the August job report, which is set to be released on Friday. Indications Thursday point to a better job report, as payroll-processor ADP said that the private sector added 201,000 jobs last month—the most since March 2012—and another report from the U.S. government showed that initial jobless claims fell by 12,000 seasonally adjusted.
A better-than-expected employment figure will further strengthen market bulls heading into the end of the third quarter.
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