Stocks end up for 4th day: Dow gains 260
Major benchmarks sprang up 1.5% or more Thursday on news of a European stimulus program, with the Dow Jones industrial average powering up 260 points.
But the index is still not in the black for 2015, a threshold both the S&P 500 and the Nasdaq managed to cross Thursday.
Stocks initially rose, then fell, then rose again as investors tried to figure out how to react to news the European Central Bank launched a bond-buying stimulus program Thursday. Investors finally decided the stimulus is a boon for global economic activity.
The major indexes eventually moved sharply higher as the Dow jumped more than 200 points in afternoon trading, ending up 260 points for a gain of 1.5%. The blue-chip index has now logged four straight days of gains.
European stocks also rose on the ECB announcement that it will make monthly bond purchases of 60 billion euros from this March through September 2016, slightly more than the 50 billion euros in purchases widely expected.
The Standard and Poor's 500 stock index also gained 1.5%. The Nasdaq composite index added 1.8%.
In Europe, the FTSE 100, which measures Britain's stock market, was up 1% and Germany's DAX index gained 1.3%. The French CAC 40 rose 1.5%.
The euro weakened against the U.S. dollar, sliding to $1.1488. A weakened euro makes European goods cheaper, which could help boost exports from the region and lift inflation from dangerously low levels.
The U.S. 10-year Treasury note yield fell slightly to 1.86%.
"A billion here, a billion there, and pretty soon you're talking real money," said Sam Stovall, chief market strategist for S&P Capital IQ, echoing the late senator Everett Dirksen.
At least initially, the ECB's moves favor the United States, Stovall said. The bond-buying program will stimulate the European economy, but at the price of keeping bond yields low. Already, the German 10-year note yields just 0.54%.
Money tends to flow toward higher yields, and as low as U.S. Treasury yields are now, they look scrumptious compared with German government bond yields. And, Stovall said, European economic and earnings growth is estimated at -1% to 1%, while U.S. earnings and economic growth is on the rally.
U.S. crude continued to languish after falling more 60% in the past seven months amid rising supplies and weaker demand. Crude fell $1.85, or almost 4%, to $45.97 a barrel in New York.
Sliding oil prices helped boost airline stocks. Shares in Southwest Airlines (LUV) surged after the carrier reported higher quarterly profit and revenue than Wall Street expected. The company said lower prices for jet fuel helped reduce costs, and estimated that it should save around half a billion dollars on fuel during the first three months of 2015. Southwest jumped 8%.
United Continental (UAL) shares jumped more 4% after it issued an upbeat outlook helped by lower fuel costs.
But today it was all about the European stimulus that put investors in the mood to buy stocks, says David Sowerby of Loomis, Sayles. "(Mario) Draghi (head of the European Central Bank) is like the head lifeguard of the European markets and he blew the whistle," says Sowerby. "People have jumped into the deep end."
European stimulus won't just help European markets, Sowerby says. "The elixir of more aggressive central bank easing has been the secret sauce for U.S. investors for years," Sowerby says. "Europe just gave a double shot of espresso."
Contributing: The Associated Press