Stocks soar after Europe’s central bank unveils bond-buying effort

BY MATTHEW CRAFT and BERNARD CONDON

Associated Press

NEW YORK — The last time the stock market was this high, the Great Recession was just getting started and stocks were pointed toward a head-first descent.

But on Thursday, the market moved swiftly in the other direction. The S&P 500 index soared to its highest level since January 2008, and the Dow Jones industrial average hit its highest mark since December 2007.

A concrete plan to support struggling countries in Europe provided the necessary jolt, and the gains were extraordinarily broad.

European markets surged and U.S. Treasury bond prices dropped as traders sold low-risk investments. All but 13 stocks in the S&P 500 index rose.

“There’s just a sea of green,” said JJ Kinahan, TD Ameritrade’s chief derivatives strategist. “It’s pretty fun.”

At a long-awaited meeting Thursday, Mario Draghi, the president of the European Central Bank, unveiled a new program to buy government bonds from the region’s struggling countries, with the aim of lowering their borrowing costs. Draghi said the program will have no set limit on how much it can buy.

Kinahan praised Draghi for two details in the plan. He didn’t declare a limit for the bond-buying program, and he said it wouldn’t put itself first in line in the event of a default, something investors had been clamoring for.

Both details should make other investors more willing to buy government bonds, along with the ECB.

“In a situation where it was easy to have a slip-up, it seems like he did everything right,” Kinahan said.

The S&P 500 soared 28.68 Thursday to close at 1,432.12. The Dow jumped 244.52 to 13,292.

The Nasdaq composite index also reached a milestone, gaining 66.54 to 3,135.81. That’s its highest level in 12 years.

European stock markets soared in response to Draghi’s announcement. Germany’s DAX and France’s CAC-40 each rallied 3 percent.

The gains were even larger in Spain and Italy, the two largest countries to get caught up in the region’s long-running government debt crisis. Spain’s benchmark index soared 5 percent, Italy’s 4 percent.