U.S. stocks rise amid ECB rate cut and falling jobless claims

TradingPub Admin | May 2, 2013

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One important facet of stock trading education is the economic news and government data that causes equities to push higher.

Rising stocks
The benchmark S&P 500 had a strong morning, trading 0.6 percent higher at 1,592.49 at 11:07 a.m. in New York, according to Bloomberg. The Dow Jones Industrial Average was also doing well, as it was up 0.5 percent at 14,776.94. 

The gains that the equity indices made in early trade came as the S&P 500 has experienced very strong performance in the recent past, as it has spiked 135 percent since reaching a recent low in March 2009, the media outlet reports. In addition, the group of blue-chip stocks rose to a new record high of 1,597.57 on April 30.

Strong jobs data
One piece of government data that was cited as helping to push stocks higher was the jobless claims figures provided by the U.S. Department of Labor, according to The Wall Street Journal. According to the government agency, the number of jobless claims fell by 18,000 to 324,000 during the most recent week. This figure was the lowest for the measure in more than five years.

Now, the attention of global market participants will turn to the April jobs report, which the U.S. Department of Labor has scheduled for release on Friday, May 3, Bloomberg reports. The median forecast of economists taking part in a poll conducted by the media outlet is for the government data to reveal that payrolls surged 145,000 during the month, and the unemployment rate was unchanged at 7.6 percent.

Market experts taking part in a survey conducted by The Wall Street Journal indicated a similar forecast, with the participants predicting that the nation would add a net total of 148,000 positions during the month.

Jobs data and sentiment
Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, emphasized that continued improvement in the labor market, if nothing more than gradual, is important to maintaining the optimism of market participants, according to Bloomberg.

"The key thing that you need to make people feel OK is to simply add jobs and ideally lower the unemployment rate," Anderson, whose firm manages about $2 billion, told the news source. "It's looking like the goldilocks type of scenario where the economy grows, but not too fast for the Fed to stop helping, but not too slow to impede earnings growth."

ECB rate cut
The European Central Bank (ECB) lowered its main refinancing rate by 0.25 percent, according to The Wall Street Journal. The move did not come as a surprise to most market participants, and was meant to bolster the lackluster economy in the region. ECB President Mario Draghi refrained from specifying that the region's central bank would engage in asset-buying programs like the Federal Reserve, but did indicate that the financial institution will do what is need to stimulate the business climate.

The head of the ECB specifically stated that the officials of the central bank "will monitor very closely all incoming information" and that monetary policy would remain geared toward expansion as long as it is required to do so, Bloomberg reports.

"The ECB did the minimum it needed to do," Michael Strauss, who contributes to the management of around $25 billion of assets as chief investment strategist at the Wilton, Connecticut-based Commonfund Group, told the news source by telephone. "Are they way behind the curve? Yes, but it at least showed that they're recognizing the economic deterioration in the euro zone."

He added that "the announcement was widely expected but on the margin it provided some help and the jobless claims data provided some help."

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