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Hot Stock News for Options Traders

Dow, S&P 500 Soar to All-Time Highs After ECB Rate Cut

Gold logged its biggest single-session gain since mid-May

by 6/5/2014 4:18:49 PM
Stocks quoted in this article:

"The European Central Bank's (ECB) decision to cut rates seemed to push the market higher today," noted Schaeffer's Trading Analyst Peter Bryans. "Stocks were in the black across the board, and the S&P 500 Index (SPX) scored another all-time closing high." In the same vein, the Dow Jones Industrial Average (DJI) settled at a record peak, tacking on 99 points by the closing bell.

Continue reading for more on today's market, including:

Trading Topic of the Week -- Trading Low-Priced Options: DON'T short-change yourself on time. Compared to a front-month contract, an option with six months of shelf life offers more time for the shares to move as you expect. This extra time provides you a little breathing room to allow the predicted price move to play out.

The Dow Jones Industrial Average (DJI - 16,836.11) spent nearly all of Thursday's session in positive territory, hitting a new all-time intraday peak of 16,845.81 and closing at a new high as well, up 98.6 points, or 0.6%. All but three of the blue-chip index's components ended the day higher, led by Caterpillar Inc.'s (NYSE:CAT) 2.5% jump. UnitedHealth Group Inc. (NYSE:UNH) settled at the back of the pack, down 0.9%.

Also tagging fresh intraday and closing highs was the S&P 500 Index (SPX - 1,940.46), which registered its highest-ever reading of 1,941.74 before closing just south of this mark, up 12.6 points, or 0.7%. The Nasdaq Composite (COMP - 4,296.23) rallied as well, gaining 44.6 points, or 1.1%.

The CBOE Volatility Index (VIX - 11.68) dipped back below the 12 mark, losing 0.4 point, or 3.3%, on the day.

CLOSING SUMMARY  INDICES

CLOSING SUMMARY  NYSE AND NASDAQ

A Trader's Take:

"Small-caps were the leaders once again, as the iShares Russell 2000 Index (IWM) seems to be making a sustained breakout from its downtrend that began in early March," added Bryans. "It was a 'risk-on' day, with many of the high-beta names in the Nasdaq also leading the large-cap S&P and Dow components. As always -- from a trader's perspective -- we will be waiting to see how the market reacts to the nonfarm payrolls data tomorrow, and not focusing on whether it's a 'good' or 'bad' number."

5 Items on Our Radar Today:

  1. In a move many are saying is "radical," the ECB lowered its deposit rate below zero (to -0.10%) and cut its benchmark rate to 0.15% from 0.25%. This marks the first time the deposit rate has been negative, which effectively means banks in the region will be charged in order to maintain their reserves. These measures are being implemented to help the eurozone stave off deflation. In a press conference following the event, ECB President Mario Draghi discussed a plan to offer long-term loans at lowered rates for the next four years. (USA Today )
  2. In the wake of the ignition-switch recall that may have played a role in 13 (and possibly more) fatalities, 15 GM executives and engineers were terminated by company CEO Mary Barra. Speaking before company employees, Barra noted that "the attitudes and practices that allowed this failure to occur will not be tolerated ... our job must be to set a new industry standard for safety, quality, and excellence." (Los Angeles Times)
  3. Weekly jobless claims rose by 8,000 during the week ended May 31, to a seasonally adjusted 312,000. This was slightly north of economists' estimates. The four-week moving average, however, dipped by 2,250 to 310,250, its lowest point in nearly seven years. (FOX Business)
  4. Option buyers wagered on Tesla Motors Inc (NASDAQ:TSLA) to zoom higher next week.
  5. General Electric Company (NYSE:GE) bulls took advantage of relatively inexpensive short-term option premiums.
EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

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