Stocks head higher after ECB takes new steps

Stocks head higher after ECB takes new steps


AP Business Writer NEW YORK (AP) - The U.S. stock market steamed higher Thursday, a day ahead of the government's closely watched monthly jobs report. Major indexes in Europe rose and the euro weakened against the dollar after the European Central Bank took new steps to boost the region's sluggish economy.

KEEPING SCORE: The Standard & Poor's 500 index rose 11 points, or 0.6 percent, to 1,939, as of 2:09 p.m. Eastern time. The Dow Jones industrial average rose 88 points, or 0.5 percent, to 16,826. The Nasdaq composite gained 38 points, or 0.9 percent, to 4,289. The S&P 500 and the Dow average are at record-high levels.

EUROPEAN MARKETS: Germany's main stock index, the DAX, ended 0.2 percent higher. It touched a record high before pulling back late in the day. France's CAC 40 closed with a gain of 1.1 percent.

NEW MOVES: The ECB cut two key interest rates on Thursday, pushing one of them below zero. The unusual move means that the ECB will charge banks to hold their money, instead of paying them interest. The goal is to arm-twist banks into lending money instead of stockpiling it.

The central bank also said it was willing to take more steps to support the region's economy if needed, including buying bonds.

IMMEDIATE RESPONSE: "The world looks to be a safer place today," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York, in a note to clients. "If you lend money out, the ECB has money for you."

SO WHAT? Europe matters to the U.S. economy and big American corporations. Added together, the countries in the European Union make up the world's second-largest economy and buy roughly a fifth of all U.S. exports. Coca-Cola and other large corporations have blamed Europe's weak economy for hurting sales.

The ECB's move to support the region's economy came as welcome news, said Hank Smith, chief investment officer at Haverford Trust. But it wasn't much of a surprise. In recent weeks, research teams at big banks and strategists on Wall Street have issued scores of reports predicting just such a move.

"It was on everyone's radar screen," Smith said.

ON SALE: PVH, the company behind the Calvin Klein and Tommy Hilfiger brands, cut its profit forecast late Wednesday, blaming the global economy and a rough winter in the U.S. for weaker sales. The retailer put more clothes on sale, which pinched profit margins. PVH's stock sank $9.20, or 7 percent, to $121.44.

BETTER, BUT: Joy Global, a maker of mining equipment, reported a big drop in quarterly profits and sales as coal miners scaled back operations. But Joy Global's results were still better than analysts had expected. The company's stock gained $3.70, or 6 percent, to $61.55.

JOBS: The number of Americans applying for unemployment benefits crept up last week to 312,000, according to the Labor Department. The report heightened speculation that the government's monthly jobs report, due out Friday, could reveal a modest slowdown in hiring in May. Also underscoring that concern was a report from payroll processer ADP on Wednesday that showed private employers pulling back on hiring last month.

Economists estimate that employers added 220,000 jobs in May and that the unemployment rate inched up to 6.4 percent from 6.3 percent as more people hunt for work.

BONDS AND COMMODS: In the market for U.S. government bonds, the yield on the 10-year Treasury fell to 2.58 percent from 2.60 percent late Wednesday. The price of oil slipped 25 cents to $102.39 a barrel.

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