NEW YORK (AP) — U.S. stocks mostly ticked higher on Thursday after Europe’s central bank became the latest to spell out how it will close the spigot on the emergency stimulus it’s flooded into the market in recent years.
More evidence also arrived that the U.S. economy is improving, including a better-than-expected report on retail sales, and the S&P 500 was on pace for its fourth gain in the last five days.
KEEPING SCORE: The S&P 500 was up nearly 4 points, or 0.1 percent, at 2,779, as of 3 p.m. Eastern time. The Dow Jones industrial average fell 56 points, or 0.2 percent, to 25,145, and the Nasdaq composite rose 47, or 0.6 percent, to 7,742.
STIMULUS WATCH: The European Central Bank said it will begin phasing out its bond-buying program in the autumn before ending it after December. That could have worried investors, who have grown accustomed to big stimulus programs from central banks in support of markets. But the ECB also said that it will hold off raising interest rates until at least the summer of 2019, which was more accommodative than some investors had been expecting.
Europe’s central bank is following the lead of its U.S. counterpart, the Federal Reserve, which has already halted its bond purchases and raised interest rates seven times since late 2015. Its latest move was on Wednesday, when it raised its benchmark rate by another quarter of a percentage point and indicated two more increases may come this year. Higher rates can help stave off inflation, but they can also hinder economic growth.
Next up on the global calendar is the Bank of Japan, which meets Friday on interest-rate policy. Many economists expect it to announce no changes to its stimulus program.
END OF AN ERA? The ECB’s move on Thursday is the latest step away from the massive programs put in place following the Great Recession.
“It is momentous because you’re moving to something more normal,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. “At the same time, you’re moving grudgingly toward that. Central banks around the world are going to err toward being more accommodative, and they don’t want to cause a market shock.”
Both the Fed and the ECB have said that their next moves will depend on what the economic data says, and if growth is strong enough, they’ll raise rates more quickly. That could end up making markets around the world more volatile, Schutte said, as investors handicap what each weekly or monthly economic report means for interest rates.
WORLD MARKETS: European stocks were up more than U.S. indexes, with France’s CAC 40 rising 1.4 percent and Germany’s DAX up 1.7 percent. The FTSE 100 in London gained 0.8 percent. In Asia, Japan’s Nikkei 225 index dropped 1 percent, South Korea’s Kospi sank 1.8 percent and the Hang Seng in Hong Kong lost 0.9 percent.
Stocks from developing economies continued their struggles, which have been compiling since the spring. Investors worry that higher U.S. interest rates will hurt emerging-market economies, and the MSCI Emerging Markets index fell 1.1 percent
STRONG US ECONOMY: U.S. retail sales jumped in May after shoppers spent more at home and garden stores, gas stations and restaurants. They likely felt emboldened by a strong job market, which has helped to lift consumer confidence.
The retail-sales numbers are scrutinized for indications of overall consumer spending, which accounts for the bulk of the U.S. economy. Economists say economic activity is likely picking up following a slowdown in growth during the first quarter of the year.
A separate report showed that fewer workers filed for unemployment claims last week than economists expected, an encouraging sign for the labor market.
CRUISING: Royal Caribbean Cruises jumped to one of the biggest gains in the S&P 500 after it agreed to buy a two-thirds stake in Silversea Cruises. The acquisition will give Royal Caribbean more access to the luxury cruising market.
Royal Caribbean rose 5.5 percent to $113.95.
YIELDS: The yield on the 10-year Treasury fell to 2.94 percent from 2.98 percent late Wednesday. It gave up gains from the prior day, when the Federal Reserve surprised some investors by speeding up its timetable for rate increases.
YIELD PLAYS: Lower interest rates can boost demand for dividend-paying stocks, which begin to look more attractive to income investors. Telecom stocks, utilities and real-estate investment trusts are among the biggest dividend payers in the market, and they were among the top-performing sectors in the S&P 500.
Financial stocks had the biggest loss among the 11 sectors that make up the index, at 0.9 percent. Lower interest rates can crimp the profit they earn from making loans.
CURRENCIES: The dollar rose to 110.59 Japanese yen from 110.55 yen late Wednesday. The euro fell to $1.1591 from $1.1773, and the British pound fell to $1.3280 from $1.3358.
COMMODITIES: Benchmark U.S. crude rose 25 cents to settle at $66.89 per barrel. Brent crude, the international standard, fell 80 cents to $75.94.
Heating oil fell 3 cents to $2.16 per gallon, wholesale gasoline dropped 3 cents to $2.09 per gallon and natural gas was close to flat at $2.97 per 1,000 cubic feet.
Gold rose $7.00 to settle at $1,308.30 per ounce, silver gained 27 cents to $17.26 per ounce and copper slipped 3 cents to $3.22 per pound.
AP Business Writer Youkyung Lee contributed from Seoul, South Korea.