US stocks have soared by four per cent after major central banks joined hands to ensure commercial banks would not be undermined by market worries over the eurozone crisis.
Sharply higher from the open, an upward flourish in the last hour pushed the Dow Jones Industrial Average’s gain to 4.2 per cent at the closing bell on Wednesday, while the broader S&P 500 added 4.3 per cent and the Nasdaq Composite surged 4.2 per cent.
The Dow ended the day at 12,045.68, up 490.05 points; the S&P was at 1,246.96, up 51.77, and the tech stock-heavy Nasdaq rose 104.83 to 2,620.34.
Announced before the Wall Street markets opened, the central banks of the United States, the eurozone, Britain, Japan, Canada and Switzerland said they would make cheaper US dollars available to commercial banks facing a lack of liquidity in the markets – a move understood to be targeted at strained European banks.
That led a clutch of other generally positive news for the markets.
China’s central bank cut its reserve requirement for banks, a move to boost its economy; Canadian growth for the third quarter came in at a strong 3.5 per cent rate; and the US delivered better-than-expected data on private sector job creation, pending home sales and business activity in the important Chicago region.
“The major averages moved sharply higher as the Federal Reserve joined five other central banks to ease the strain on financial markets by reducing the interest rate on dollar swaps,” said Scott Marcouiller of Wells Fargo Advisors.
All 30 members of the Dow blue chips were higher, led by JPMorgan Chase’s 8.4 per cent gain and Alcoa’s 7.6 per cent jump.
