Banks lead stocks to another record day
NEW YORK — 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 smallcompany stocks soared again.
Bond yields in the U.S. and Europe, particularly in heavily indebted countries, jumped after the European Central Bank, led by Mario Draghi, surprised investors by saying it will reduce the size of its monthly bond purchases. That sent interest rates higher, which makes it more profitable for banks to lend money.
“Bond yields are creeping higher as these central banks are easing off the pedal a bit,” said John Canally, an investment strategist for LPL Financial.
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 European Central Bank extended its bondbuying economic stimulus program, as investors expected. It 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 is not getting ready to phase out its stimulus program, Canally, of LPL Financial, said investors are starting to think about the time when the ECB will gradually stop buying bonds and will start raising interest rates in response to a healthier economy.
Draghi said some stimulus was still needed despite a somewhat brighter economic picture because “uncertainty is everywhere... just look at the election calendar for next year.”
In other trading, crude oil climbed back above $50 a barrel as investors shifted their focus to whether OPEC will be able to persuade other producers to commit to output cuts.