European Central Bank president Mario Draghi once again donned his Superman cape and came to the market's rescue, outlining plans for the ECB to make unlimited purchases of member nations' bonds on the condition they submit to outside fiscal oversight. On paper, the plan isn't a quick-fix, but it should alleviate some prevailing global growth concerns, help to lower bond rates for Europe's most troubled nations, and lessen market uncertainty. Tack on the fact that U.S. jobless claims hit their lowest levels in a month and you have the recipe for a rally.
It's for these reasons why the Dow Jones Industrial Average (INDEX: ^DJI) is marching higher to the tune of 238 points as of this writing -- a move better than 1.8%. Today's move is the largest one-day jump in more than two months, and not a single member of the Dow's 30 components is currently trading lower.
Not surprisingly, financials are leading the upward charge, with both Bank of America (NYS: BAC) and JPMorgan Chase (NYS: JPM) tacking on the biggest gains. Large money-center banks like these have financial tie-ins that spread across the globe, including Europe, and any lessening of that uncertainty is bound to make shareholders of these banks happy.
Oil and gas companies ExxonMobil (NYS: XOM) and Chevron (NYS: CVX) are also joining in on the rally, with oil prices per barrel rising by more than $1 and slowly creeping up on that magical $100/barrel mark again. The thesis here is similar to that of the financials: If the ECB is buying bonds and supporting its weaker member nations, then economic activity in the U.S. and Asia is likely to pick up, which should result in higher demand for oil.
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The article The Dow Leaves Pessimists in the Dust originally appeared on Fool.com.
Fool contributor Sean Williams owns shares of Bank of America but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Bank of America, JPMorgan Chase, and ExxonMobil. Motley Fool newsletter services have recommended buying shares of Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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