(As of 7:15am, PST)
Stocks have opened the day headed upward after an
announcement by the European Central Bank that they will deliver fresh stimulus
in an attempt to give the Eurozone economy a boost. Another factor contributing
to a solid opening today was a better than expected U.S. jobless claims report.
All of this has stocks headed in a different direction than oil for a change.
In the early going, oil is down nearly 1.5% while the S&P500 is currently
up .5%. What a difference a fresh stimulus package will do to investor
sentiment. In summary, the ECB cut the bank’s key lending rate to zero from
.05% and expanded the size and scope of its monthly bond purchases. This move
definitely had more punch than what the ECB announced in December. This news
may have a positive spillover effect on the U.S. financial sector. However, the
announcement comes a week ahead of the Federal Reserve’s policy meeting on
March 15-16 and the Fed has indicated it is on the path toward raising rates
which is a different path than the ECB’s current plan. The jobs data is an
indication that the U.S. economy is showing signs of strength. Jobless claims
fell to a five-month low suggesting layoffs are decreasing and that the labor
market is showing improvement. March has been a good month so far and the news
today should keep the markets on an upward path.
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