U.S. stocks rose Thursday after the European Central Bank surprised traders by trimming its main interest rate to a record low, and announcing that it would purchase asset-backed securities in an effort to stimulate the region's ailing economy.
The move caught financial markets by surprise, and pushed up stocks both in Europe and the U.S. Some analysts had been expecting the ECB to say it was preparing a new stimulus program, but most did not expect an announcement as early as this week. While stocks rose broadly in Europe and the U.S., the euro slumped against the dollar.
The ECB's move is a "positive for global equities, because it gives increased confidence that there will be action taken if necessary to keep economic growth advancing," said Jim McDonald, chief investment strategist for Northern Trust.
There was also encouraging news for investors on the U.S. economy. U.S. services firms expanded in August at the fastest pace on record and businesses added jobs at a healthy pace in August, according to a private survey, the fifth straight month of solid gains.
KEEPING SCORE: The Standard & Poor's 500 index rose four points, or 0.2 percent, to 2,005 as of 1:27 p.m. Eastern. A close at that level would mark another all-time high. The Dow Jones industrial average gained 33 points, or 0.2 percent, to 17,111. The Nasdaq composite added 14 points, or 0.3 percent, to 4,587.
MORE CUTS: The ECB said it had trimmed its benchmark interest rate to 0.05 percent from a previous record low of 0.15 percent. In a news conference, ECB President Mario Draghi also said the bank would also start purchases of private sector financial assets in October. The program aims to make credit cheaper, helping investment and growth at a time when the economy of the 18-country eurozone has stalled.
DOLLAR RISES, EURO SLUMPS: Europe's single currency, which has been in retreat over the past few weeks on expectations that the ECB may pursue further stimulus measures, fell 1.6 percent to $1.2939 following the ECB's announcement. The currency is trading at its lowest level since July 2013.
STRONG HIRING: U.S. businesses added jobs at a healthy pace in August, according to a private survey, the fifth straight month of solid gains. Payroll processer ADP said Thursday that private employers added 204,000 jobs last month, down from 212,000 in July, which was revised slightly lower. Job gains above 200,000 are usually enough to lower the unemployment rate.
The report comes ahead of the government's closely followed monthly jobs report on Friday.
SERVICE HIGH: U.S. services firms expanded in August at the fastest pace on record. The Institute for Supply Management said Thursday that its services index rose to 59.6 last month from 58.7 in July. The August figure is the highest recorded since the measure was introduced in January 2008.
EARNINGS BEAT: PVH, the owner of the Calvin Klein and Tommy Hilfiger brands, was the biggest gainer in the S&P 500 index. PVH's stock surged $11.29, or 9.6 percent, to $128.42, after the company reported earnings that exceeded the expectations of Wall Street analysts.
BONDS, METALS: U.S. government bond prices slipped. The yield on the 10-year Treasury note, which moves inversely to its price, climbed to 2.44 percent, down from 2.40 percent late Wednesday. In metals trading, gold was unchanged at $1,269.50 an ounce.
OIL: Benchmark U.S. crude for October delivery was down 78 cents to $94.77 a barrel in electronic trading on the New York Mercantile Exchange.