NEW YORK — A report that major central banks would be ready to pump money into the financial system after the Greek elections this weekend gave the stock market a late push higher.
NEW YORK — A report that major central banks would be ready to pump money into the financial system after the Greek elections this weekend gave the stock market a late push higher.
The Reuters report said major central banks were preparing for coordinated action if the results of Greek elections on Sunday strain global financial markets.
The Dow Jones industrial average jumped 155.53 points to close at 12,651.91 Thursday. That’s a gain of 1.2 percent. The Dow jumped 100 points after the report came out then pulled back.
Investors are on edge ahead of Greece’s election this weekend because parties opposed to the terms of the country’s financial bailout could take control of the government. If that happens and the country leaves the euro, many fear the currency union could be torn apart and European banks could fail.
The stock market began climbing in early trading after a tame inflation reading and another weak jobs report raised expectations the Federal Reserve would offer more support for the U.S. economy.
Applications for unemployment benefits rose last week, according to the latest government report. The four-week average increased for a third straight week, another sign the jobs market remains weak.
The government’s main measure of U.S. consumer prices fell in May by 0.3 percent, the biggest drop since December 2008. Analysts said the slowdown in price increases could make it more likely the Fed will announce new steps to boost the economy when it meets next week. Low inflation gives the Fed more leeway to inject money into the financial system, keep interest rates low and encourage borrowing.
“The markets are higher, I think, because there are enough investors who believe that this morning’s data on prices and jobless claims increase the case for more Fed easing as soon as next week’s meeting,” said Clark Yingst, chief market analyst at the securities and banking firm Joseph Gunnar.
Yingst said the market could easily switch directions in the coming days. “Traders are just following the trend one way on one day, but are perfectly happy following it the other way the next.”
The Standard & Poor’s 500 rose 14.22 points to 1,329.10. The Nasdaq composite gained 17.72 points to 2,836.33.
The gains were broad. All 10 industry groups in the S&P 500 rose. International Game Technology led the S&P with a 14.3 percent leap, following the company’s announcement it would buy up to $1 billion of its own stock. The stock jumped $1.90 to $15.12.
Just the whiff of another round of help from the Fed has been enough to shoot stocks higher in recent weeks, but the gains often disappear as quickly as they arrive. Last Wednesday, the Dow posted its best day this year, surging 286 points. Comments from a Fed official that hinted at more stimulus helped launch the rally.
The enthusiasm fizzled the next day, however, after Fed Chairman Ben Bernanke told a closely watched Congressional hearing that no new steps were being contemplated at the moment.
In Europe, borrowing rates for Spain touched a record high Thursday after the rating agency Moody’s cut its credit rating to one notch above junk status. Spain’s benchmark 10-year bond hit 6.96 percent before pulling back.
Major stock indexes in Europe barely budged. Greek stocks were the exception. Athens’ main index surged 10 percent following rumors elections this weekend will yield a government that can keep the country in the euro. Greek law forbids the release of new public opinion polls in the last two weeks before the election.