Surprise European rate cut flips US futures market

AP News
Posted: Nov 07, 2013 9:00 AM
Surprise European rate cut flips US futures market

NEW YORK (AP) — Stock futures reversed course and headed higher Thursday after Europe's central bank made a surprise interest rate cut and the U.S. economy grew much faster than most had expected in the third quarter.

The U.S. Labor Department also reported that weekly unemployment benefit claims last week dropped to levels not seen since before the recession.

Dow Jones industrial futures rose 84 points to 15,767. S&P futures gained 6.9 points to 1,772.50 Nasdaq futures rose 8.25 points to 3,384.25.

The U.S. economy expanded at a 2.8 percent annual rate from July through September. Most analysts had projected growth had slowed from the last quarter's 2.5 percent annual rate to 2 percent.

Before the Commerce Department released those surprising figures, the European Central Bank startled markets by lowering the benchmark refinancing rate to a record low 0.25 percent, from 0.5 percent, at a meeting in Frankfurt.

Policy makers want to ensure the nascent economic recovery takes hold in Europe, where unemployment remains endemic.

The dollar surged against other currencies.

The Labor Department reported that the number of people seeking U.S. unemployment benefits fell 9,000 to a seasonally adjusted 336,000 last week.

The less volatile four-week average dropped 9,250 to 348,250. The average was elevated by the 16-day partial government shutdown.

Weekly applications have now fallen for four straight weeks.

Thursday is also the day that Twitter will begin trading publicly, the most anticipated initial public offering since the Facebook debacle last year.

Fannie Mae posted its seventh straight profitable quarter and Wendy's third-quarter losses narrowed, though its outlook spooked investors and shares slid 8 percent in premarket trading.

And J.C. Penney said that its comparable store sales rose for the first time since December 2011.