Wall Street, bond prices jump as markets await ECB meeting

Wed Dec 7, 2016 4:26pm EST
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By Sinead Carew

NEW YORK (Reuters) - U.S. stocks jumped to record levels and bond prices climbed on Wednesday as investors prepared for the European Central Bank to signal an extension of its bond-buying at its Thursday meeting.

The euro gained against the dollar as investors also waited for possible indications on when the ECB will begin paring bond purchases under its quantitative easing program.

Such a move might propel bond yields around the world higher. Prices on longer-dated U.S. Treasuries rose Wednesday after disappointing overseas data hurt optimism about global growth.

"The market does not have a lot of clarity on what the ECB would do tomorrow," said Jeffery Elswick, director of fixed income at Frost Investment Advisors in San Antonio, Texas.

The S&P 500 and Dow indexes hit records, with the biggest percentage increases coming from the telecommunications .SPLRCL and REIT .SPLRCREC sectors, heavy dividend payers.

"There's a little bit of a bond market rally going on, certainly in the long end, so that means dividend stocks feel better," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "People are short-covering ahead of the ECB announcements tomorrow. Lower rates on the continent (are) constructive for growth and good for equity."

Healthcare .SPXHC was the sole S&P laggard after President-elect Donald Trump said in an interview he would bring down drug pricing.

"I think it is a new fact of life, going forward, that fundamentals can be swept aside any day by comments from the (President-elect)," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.   Continued...

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, December 6, 2016.      REUTERS/Staff/Remote