U.S. stocks advance after being boosted by optimism by European Central Bank’s (ECB) decision to add additional stimulus efforts to Europe’s fragile economy. ECB announced that it was going to cut its main lending rate and introduced a so-called negative deposit rate.
What is a negative deposit rate? Basically to define this term lets begin with a positive deposit rate, a positive deposit rate a policy tool whereby banks can park their reserves with central banks and in return pick up a small amount of interest. It can be compared to a savings account, thus if banks can earn a healthy return depositing reserves at a central bank, they are likely to do so. But if they can’t, they’re likely to move their cash elsewhere. One option: Lending to households and businesses, which would benefit the broader economy. So by making the deposit rate negative, the ECB is trying dissuade these risk-averse banks from locking up their cash.
U.S. weekly jobless claim report shows that initial claims for jobless benefits increased by 8,000 to 312,000 in the latest week.
TheS&P 500 closed 0.65% higher to 1,940.46, a record-making level after robust gains over the previous month. The Dow Jones Industrial Average was up 0.57% to 16,833.4. TheNasdaq increased 1% to 4,296.23.
Gold futures rose 0.7% to settle at $1,253.00 a troy ounce, while crude oil futures eased 0.2% to settle at $102.48 a barrel.