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U.S. stocks surge after ECB rate cut decision

Xinhua, March 12, 2016 Adjust font size:

U.S. stocks traded sharply higher in the morning session Friday, as investors continued to assess the impacts of the European Central Bank (ECB) decision to cut its benchmark interest rate to a record low of zero percent.

By midday, the Dow Jones Industrial Average jumped 218.60 points, or 1.29 percent, to 17,213.73. The S&P 500 added 27.09 points, or 1.36 percent, to 2,016.66. The Nasdaq Composite Index leapt 64.75 points, or 1.39 percent, to 4,726.91.

The ECB cut interest rates on Thursday to boost the euro-zone economy, surprising financial markets by dropping its main refinancing rate to zero from 0.05 percent. It also expanded its quantitative easing asset-buying program to 80 billion Euros (89.08 billion dollars) a month from 60 billion euros (66.81 billion U.S. dollars) and cut its deposit rate to -0.4 percent from -0.3 percent, charging banks more to keep their money with the ECB.

ECB President Mario Draghi said the Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time.

"Draghi managed to do enough to garner an initial positive market reaction. He has another opportunity to impress at the news conference, but for now, the ECB has defied the skeptics and achieved a tiny bit more traction in its efforts to reinflate the European Union economy," said Chris Low, chief economist at FTN Financial.

On the economic front, U.S. Import and Export Price Indexes came out better than expected. In February, U.S. import prices fell by 0.3 percent, while export prices decreased 0.4 percent, the Labor Department reported Friday.

On Thursday, U.S. stocks closed fractionally mixed after volatile trading, as Wall Street digested the ECB move and Draghi's comments. Enditem