Stocks gain on European Central Bank's announced fresh stimulus measures
US stocks ended higher at on Thursday, 12 September 2019. The Dow marked its longest win streak in more than a year on Thursday, after the European Central Bank's announced fresh stimulus measures, including an interest-rate cut that moved a deposit rate further into negative territory, raising hopes that the Federal Reserve may also enact easy-money policies next month. The market had been on an uptrend early in the day following reports suggesting that U.S. and China trade aggression continued to soften ahead of meeting next month.
The Dow Jones Industrial Average rose 45.41 points, or 0.2%, to close at 27,182.45. Meanwhile, the S&P 500 index added 8.64 points, or 0.3%, to finish at 3,009.57, while the Nasdaq Composite Index advanced 24.79 points, or 0.3%, to end at 8,194.47.
In terms of trade news, President Trump said he will delay the tariff rate increase on $250 billion of Chinese imports to Oct. 15 from Oct. 1. Those goods remain taxed at 25%, but the new 30% rate will be delayed at China's request, as Oct. 1 marks the 70th anniversary of the People's Republic of China. The president also remarked that China is expected to buy large amounts of U.S. agricultural goods.
All three benchmarks ended the day off their best levels as market's pulled back as the index's came within striking distance of recent closing highs.
Earlier Thursday morning stocks rose on news the European Central Bank cut its deposit rate from -0.4% to -0.5%, while announcing it would restart open-ended purchasing of long-term government bonds at a pace of 20 billion a month in an effort to further reduce long-term interest rates. The bank said rates would remain at present or lower levels until the inflation outlook robustly converges with its target of just below 2%.
Expectations that the U.S. Federal Reserve may be influenced by the ECB had contributed to a fall in bond yields earlier in Thursday's session.
The Fed's monetary policy gathering will be held next week. The central bank is widely expected to cut U.S. interest rates by 25 basis points on Sept. 18.
Reductions to global interest rates and some $17 trillion dollars in government debt that offers a negative yield have helped to bolster appetite for alternatives assets like gold, considered a haven during times of economic uncertainty.
Investors were also watching new economic data which showed the number of Americans applying for new unemployment benefits fell by 15,000 to 204,000 during the week ended 7 September 2019, below expectations of 213,000.
The U.S. consumer-price index rose 0.1% in August, in line with expectations, while core inflation rose 0.3%, above forecasts of a 0.2% gain. The year-over-year rise in underlying inflation advanced to 2.4%, matching a 13-month high.
Bullion prices ended higher at Comex on Thursday, 12 September 2019. Gold futures marked a second consecutive gain on Thursday after the European Central Bank cut eurozone interest rates and delivered a batch of measures intended to boost the region's sluggish economy. The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation and European expansion.
December gold on Comex gained $4.20 an ounce, or 0.3%, to settle at $1,507.40 an ounce after rising by 0.3% Wednesday. Silver for December delivery added nearly a penny, or 0.04%, at $18.177 an ounce, after giving up less than 0.1% a day ago.
Crude oil futures finished with a loss on Thursday, 12 September 2019 as OPEC and its allies reiterated their commitment to current output cuts, but failed to announce bigger production cuts as some had expected in the wake of easing tensions between the U.S. and Iran.
West Texas Intermediate crude for October delivery fell 66 cents, or 1.2%, to settle at $55.09 a barrel on the New York Mercantile Exchange, after falling nearly 3% on Wednesday, marking the lowest close for a front-month contract since Sept. 3. November Brent crude lost 43 cents, or 0.7%, to $60.38 a barrel on ICE Futures Europe, after shedding 2.5% a day ago.
Oil prices also settled lower after a monthly report from the International Energy Agency said that supplies from outside of OPEC would rise by 2.3 million barrels a day in 2020, from 1.9 million barrels a day this year. The IEA left its daily global demand growth forecast at 1.1 million for 2019 and 1.3 million barrels for 2020.
Looking ahead, investors will receive the following reports on Friday: Retail Sales for August, the preliminary September reading for the University of Michigan Index of Consumer Sentiment, Import and Export Prices for August, and Business Inventories for July.
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