U.S. stocks climb to all-time highs
The European Central Bank said it will reduce bond purchases, which triggered interest rate hikes.
new york» — After a quiet start, major U.S. stock indexes again set all-time highs Thursday as the market built on a surge the previous day. Banks continued to lead the way as bond yields jumped, and small-company stocks soared again.
Bond yields in the U.S. and Europe, particularly in heavily indebted countries, jumped after the European Central Bank surprised investors by saying it will reduce the size of its monthly bond purchases. That sent interest rates higher, which makes it profitable for banks to lend money.
Energy companies rose with the price of oil, and companies that make chemicals and other basic materials also climbed. Industrial companies and makers of household goods slipped, which held stocks back from even larger gains.
The Dow Jones industrial average climbed 65.19 points, or 0.3 percent, to 19,614.81. The Standard & Poor’s 500 index picked up 4.84 points, or 0.2 percent, to 2,246.19.
The Nasdaq composite had lagged behind the other major indexes over the last two weeks, but it rebounded along with technology companies and rose 23.59 points, or 0.4 percent, to 5,417.36.
The Russell 2000 index of small-company stocks jumped 21.87 points, or 1.6 percent, to 1,386.37.
The European Central extended its bondbuying economic stimulus program and will spend about $579 billion through the end of 2017. But starting in March it will begin spending less on bonds.
While the bank said it’s not getting ready to phase out its stimulus program, John Canally, an investment strategist for LPL Financial, said investors realize the ECB will gradually stop buying bonds and will start raising interest rates in response to a healthier economy.
Government bond prices in Spain, Italy and Portugal fell, and yields rose sharply.
U.S. government bond prices also fell. The yield on the 10-year Treasury note rose to 2.41 percent from 2.34 percent. That drove banks stocks up since higher interest rates will allow banks to charge more for lending money. Goldman Sachs, which has surged 33 percent since the presidential election and is trading near its all-time high, rose $5.89, or 2.5 percent, to $241.45, and Bank of America picked up 38 cents, or 1.7 percent, to $22.95.
Benchmark U.S. crude rose $1.07, or 2.1 percent, to $50.84 per barrel in New York. Brent crude added 89 cents, or 1.7 percent, to $53.89 a barrel in London.