All ten sectors end higher led by energy sector
US stocks ended Wednesday's choppy trading day with modest gains on 21 January 2015, extending its winning streak to three sessions, as investors widely expect the European Central Bank to deliver on monetary stimulus at its key meeting on Thursday. Stocks shook off earlier worries and turned higher after media reports said that the ECB is considering a bond-buying program of about 50 billion a month to help revive the flagging eurozone economy.
The Dow Jones Industrial Average added 39.05 points, or 0.2%, to 17,554.28. The Nasdaq Composite gained 12.58 points, or 0.3%, to 4,667.42. The S&P 500 switched between gains and losses, but closed 9.58 points, or 0.5%, higher at 2,032.13.
All ten sectors registered gains with energy maintaining the lead throughout the session.
Gains on the blue-chip index would be higher still if it were not for a big drop in IBM, which was shaving off 31 points.
A proposal from the European Central Bank's Frankfurt-based executive board calls for bond purchases that would last for a minimum of one year, according to The Wall Street Journal on Wednesday morning. Stock markets were further boosted by a jump in oil prices as well as news that the Bank of Canada announced a surprise rate cut.
The Wall Street Journal reported that a bond-buying program on the table to help juice the eurozone would see monthly bond purchases of about 50 billion ($58 billion) for at least a year.
At Wall Street, stronger-than-expected U.S. housing starts may have also been considered a sign of improving demand prospects. Led by a large increase in single-family construction, new housing starts increased 4.4% in December to 1.089 million from an upwardly revised 1.043 million (from 1.028 million) in November. The consensus pegged new housing starts at 1.040 million. Single-family construction increased 7.2% to 728,000 from 679,000 in November, representing the largest number of single-family starts January 2008 (773,000). Building permits fell to a seasonally adjusted annualized rate of 1.032 million versus a revised 1.052 million for November (from 1.035 million) The consensus expected permits to come in at 1.060 million.
A German government five-year bond auction Wednesday fetched a record-low 0.04% return for investorsa sign that European investors fully expected a quantitative easing package on Thursday that will work to further weaken the Euro currency. Other European bond market yields are also near their record lowsmainly on concerns of freshly printed Euros streaming into the financial system in the coming months.
The Bank of Japan on Wednesday cut its domestic consumer price inflation outlook to 1.0% from 1.7%, on an annual basis, and blamed lower crude oil prices for the move. This news was actually not as dour as many expected on the deflation-worry front. The BOJ left its monetary policy unchanged.
China's central bank chief said Wednesday that lower oil and other raw commodity prices are a positive for China's economic growth, and said China will keep its monetary policy stable.
It was mixed finish for bullions at Comex on Wednesday, 21 January 2015. Gold prices saw a modest sell off in late-morning trading on Wednesday, as a report the European Central Bank would indeed announce a quantitative monetary stimulus plan boosted U.S. and European stock markets, which in turn prompted some profit-taking pressure in gold. Gold lost some of its earlier momentum to snap a seven-day winning streak on Wednesday, unable to defend its first foray above $1,300 an ounce since August.
Gold for February delivery relinquished its earlier high to dip 50 cents to settle at $1,293.70 an ounce after settling at its highest price in five months on Tuesday. Despite Wednesday's retreat, the precious metal is still up about 9% year to date. March silver futures advanced 24 cents, or 1.3%, to $18.19 an ounce in electronic trading.
Crude-oil futures rose on Wednesday, 21 January 2015 as news the European Central Bank is close to outlining a more aggressive stimulus package to boost Europe's economy stoked hopes of more demand for crude. Oil traders anticipate Thursday's European Central Bank meeting will bring forward a decision on the size and scope of a bond-buying program.
Light, sweet crude futures for delivery in March rose $1.31, or 2.8%, to settle at $47.78 a barrel on the New York Mercantile Exchange. Futures ended Tuesday down 4.7%.
The EIA will report on crude and crude derivatives inventories on Thursday, a day later than usual due to Monday's Martin Luther King holiday. Market expects the EIA to show crude-oil inventories up 2.5 million barrels on the week ended 16 January 2015. Gasoline stocks are seen up 1.05 million barrels, while distillate stocks, which include heating oil, are expected to have increased by 167,000 barrels.
Treasuries notched their highs in the morning before giving up those gains in early afternoon action. As a result, the 10-yr yield jumped six basis points to 1.86%.
Participation was a bit below average with roughly 750 million shares changing hands at the NYSE floor.
Tomorrow, weekly Initial Claims will be released at 8:30 ET (consensus 302,000) while the FHFA Housing Price Index for November will cross the wires at 9:00 ET.
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