Stocks Climb on Earnings, ECB's Plan to Slow Bond Buying
U.S. stocks move higher on earnings
-- ECB lays out QE plans
-- Euro, German bond yields edge lower
U.S. stocks rose Thursday after several companies reported upbeat earnings and European Central Bank officials unveiled plans to scale down but extend their bond-buying program.
The Dow Jones Industrial Average added 80 points, or 0.3%, to 23407, recouping some of the losses suffered Wednesday. The S&P 500 rose 0.2%, while the Nasdaq Composite gained 0.1%.
Corporate results continued to drive swings in individual U.S. stocks in one of the busiest days for third-quarter reports. Without any major geopolitical developments or near-term legislative changes in Washington, D.C., money managers say they are closely following earnings season.
"We're on a pendulum this week," said Larry Peruzzi, managing director of international equity trading at Mischler Financial. "Right now it's earnings driving the market up and down."
DowDuPont gained 2% after it gave investors an early look into its sales and profit results, the first window into the global chemical giant following the combination of Dow Chemical and DuPont.
Ford Motor rose 0.8% after the auto maker said third-quarter profit rose amid strong truck sales, a lower tax rate and cost cuts.
Twitter reported a narrower loss and raised its earnings forecast for the fourth quarter, but also said it overstated its number of users for the past three years. Twitter shares surged 16%, its largest percentage increase in more than a year.
In Europe, stocks gained momentum while the euro and bond yields edged lower after the ECB said it would pare back its monthly bond purchases to EUR30 billion a month from EUR60 billion and keep buying until the end of September next year. The ECB also reiterated that interest rates would remain at their current levels well past the end of the asset purchase program.
The Euro Stoxx 50 index of eurozone stocks gained 1.3%, while the euro fell 0.9% against the U.S. dollar to $1.1703.
The dollar rose to its highest level in more than three months as the euro weakened. The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.4%.
Yields on German 10-year bonds fell to 0.415%, according to Tradeweb, from 0.464% just ahead of the ECB announcement. Yields fall as prices rise.
The ECB's move was closely in line with what investors and economists had forecast, underscoring the muted market reaction.
The decision "is something that everyone was expecting," says Philippe Waechter, chief economist at Natixis Asset Management.
Still, many took the development and ECB President Mario Draghi's tone during his news conference as a confirmation that eurozone monetary policy would remain ultraloose for some time to come.
"The longer the program goes on, the further into the future any prospect of a rate hike is, keeping upward pressure on the euro at bay," said James Athey, investment manager at Aberdeen Standard Investments.
Many investors believe the eurozone economy is strong enough to handle the gradual shift in policy, underscoring the calm in the region's riskier assets in recent months. Expectations for a policy change come as the currency bloc's economy is on course for its strongest year since 2007, with measures of consumer confidence in the bloc reaching decade-highs.
"Growth is absolutely on fire," said Michael Collins, portfolio manager at PGIM Fixed Income. "The need for central bank support is over, at least in the near term," he said.
While inflation has remained well below the bank's target, purchasing managers' indexes released this week showed the currency area posted its fastest employment growth in a decade, raising the prospect that rising wages may lift still-weak inflation.
Meanwhile, in Europe Thursday, Sweden's Riksbank and Norway's Norges Bank both left their monetary policy unchanged.
Earlier, Asian markets were little changed.
Write to Riva Gold at riva.gold@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
October 26, 2017 12:28 ET (16:28 GMT)