US stocks close higher ahead of key jobs report
U.S. stocks closed higher on Thursday, breaking two days of losses amid details of quantitative easing in the euro zone and anticipation of Friday’s nonfarm payrolls report.
It’s “basically a market just buying time ahead of tomorrow’s employment data,” said Peter Cardillo, chief market economist at Rockwell Global Capital. He expects the addition of 228,000 jobs and the unemployment rate unchanged at 5.7 percent.
The big data point for the week is the February U.S. jobs report, released before the bell on Friday. Analysts expect about 240,000 nonfarm payrolls, below last month’s 257,000. Hourly earnings and unemployment will be key indicators for investors seeking insight on the Fed’s timing of an interest rate hike.
The S&P struggled to stay in positive territory, while the Dow and Nasdaq held modest gains. U.S. stocks ended lower for each of the last two days, pulling back from Monday’s records that sent the Nasdaq above 5,000 in the close for the first time since March 2000.
The European Central Bank will start its 1 trillion euro ($1.1 trillion) bond-buying program on Monday, March 9, with expectations to end in September 2016, President Mario Draghi said during a press conference on Thursday. He also raised regional growth forecasts for 2015 and 2016 to 1.5 percent and 1.9 percent, respectively.
“After a while the market settled into a pretty flat day,” said Chuck Self, chief investment officer of ETF strategy advisor iSectors. “There’s a lot of controversy over how effective the QE plan is going to be.”
European equities closed higher on the news and U.S. stocks initially traded about 0.5 percent higher.
“We got a little lift from (Draghi) and we’re waiting for a host of economic data,” said Art Hogan, chief market strategist at Wunderlich Securities.
The euro (Exchange:EUR=) dipped below $1.10 for the first time since September 2003.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman, noted that there’s “not much support to hang one’s hat on until (the Euro is) closer to $1.07.”
“The broader market applications are the central banks are going to stay very vigilant to promote economic output,” said Tim Dreiling, senior portfolio manager at U.S. Bank Wealth Management.
U.S. monthly jobless claims rose 7,000 to a seasonally adjusted 320,000 for the week ended Feb. 28, above estimates.
“This is a very positive economic backdrop. I think the big thing today is Draghi’s upgrade of European growth because of quantitative easing,” said Doug Cote, chief market strategist at Voya Investment Management.
Other data reports came in slightly negative, mostly due to seasonal factors, analysts said.
Factory orders fell 0.2 percent in January, missing estimates for a gain and posting their sixth monthly straight decline. Productivity topped estimates with a decline of 2.2 percent versus estimates of a 2.3 percent decline but below the 1.8 percent pace it had reported last month.
Government offices in Washington D.C. were closed Thursday due to severe weather conditions.
The S&P 500 (^GSPC) closed up 2.51 points, or 0.12 percent, at 2,101.04, with utilities leading six sectors higher and energy the greatest laggard.
The Nasdaq (^IXIC) closed up 15.67 points, or 0.32 percent, to 4,982.81.
The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, traded near 14.
Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 660 million and a composite volume of 3 billion in the close.
Crude oil settled down 77 cents, or 1.49 percent, to $50.76 a barrel on the New York Mercantile Exchange. Gold futures settled down $4.70, $1,196.20 an ounce.
The U.S. 10-year Treasury yield traded near 2.11 percent. The U.S. dollar traded higher against major world currencies.
In corporate news, food and general bulk merchandise retailer Costco Wholesale reported better-than-expected quarterly profit early Thursday, boosted by a tax benefit related to its special cash dividend last month.
Costco, the third-largest U.S. retailer, said net income rose to $598 million, or $1.35 per share, for the second quarter ended Feb. 15, from $463 million, or $1.05 per share a year earlier.
Simon Property (SPG) is mulling a bid for rival mall owner Macerich (MAC), said an initial report by the Wall Street Journal. Simon hasn’t made a formal offer as yet, although it did reveal a 3.6 percent stake in Macerich last year.
Piper Jaffray downgraded McDonald’s (MCD) to “neutral” from “overweight,” saying that the stock is appropriately valued after a recent 12 percent increase, and that initiatives to increase sales may work more slowly many expect.
Cooper Cos., Diamond Foods, Esterline Tech and Fresh Market report after the close.
Markets also await information on Fed bank stress tests, expected after the closing bell.
Asian markets ended mostly in the red with China’s lower GDP growth target of 7 percent, the lowest in 11 years.
-CNBC’s Peter Schacknow contributed to this report.
On tap this week:
Chain store sales
ECB Governing Council Press Conference
Earnings: Cooper Cos., Diamond Foods, Finisar, Quiksilver
4:30 p.m.: Fed balance sheet/Money supply
Weekly rig count
Earnings: Foot Locker, Staples
8:30 a.m.: Nonfarm payrolls
8:30 a.m.: International trade
3 p.m.: Consumer credit
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