US stocks higher after ECB move

New steps from the European Central Bank to revive the region's flagging economy have given markets a lift, pushing the Standard & Poor's 500 index to another record high.

The Dow Jones industrial average rose 98.58 points, or 0.6%, to 16,836.11
The Dow Jones industrial average rose 98.58 points, or 0.6%, to 16,836.11

In the US market, the gains were broad but modest. All 10 industries in the S&P 500 crept higher, led by industrial companies and banks.

The ECB cut two key interest rates, 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 rather than stockpiling it.

Mario Draghi, the ECB's president, said the bank was willing to take more steps to support the region's economy if needed, including buying bonds.

"It's a big step by Draghi," said Jason Pride, director of investment strategy at Glenmede Trust. "I would say it's a big thing even though the markets may have expected it."

The Standard & Poor's 500 index rose 12.58 points, or 0.7%, to close at 1,940.46.

The Dow Jones industrial average rose 98.58 points, or 0.6%, to 16,836.11. The Nasdaq composite gained 44.58 points, or 1.1%, to 4,296.23. Both the S&P 500 and the Dow average are at record-high levels.

Germany's main stock index, the DAX, touched a record high before pulling back and ending the day with a gain of 0.2%. France's CAC 40 surged 1.1%.

"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."

The US and Europe are tightly connected through financial markets, the banking system and trade. The European Union makes up the world's second-largest economy and buys roughly a fifth of US exports. Coca-Cola and other large corporations have blamed Europe's weak economy for hurting sales.

Before the market opened, the Labour Department said the number of Americans applying for unemployment benefits crept up last week to 312,000.

The news heightened speculation that the government's monthly jobs report, due out tomorrow, could reveal a modest slowdown in hiring in May. It also followed a report from payroll processor ADP yesterday that showed private employers pulling back on hiring last month.

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

Among other companies making moves, PVH, the company behind the Calvin Klein and Tommy Hilfiger brands, cut its profit forecast late yesterday, blaming the global economy and a rough winter in the US for weaker sales. The retailer put more clothes on sale, which pinched profit margins. PVH's stock sank 10.59 US dollars, or 8%, to 120.09 dollars.

Joy Global, a maker of mining equipment, reported a big drop in quarterly profits and sales as coal miners scaled back operations. Its results were still better than analysts had expected. The company's stock gained 3.85 dollars, or 7%, to 61.70 dollars.

In the market for US government bonds, the yield on the 10-year Treasury fell to 2.58% from 2.60% late yesterday. The price of oil slipped 16 cents to 102.48 dollars a barrel.