Europe's Push for a Recovery Lifts the Dow to Intraday High

The European Central Bank slashes its benchmark and pushes a negative deposit rate in an attempt to jump-start the continent's sluggish economic growth.

Jun 5, 2014 at 2:30PM
Daily Fool

The Dow Jones Industrial Average (DJINDICES:^DJI) has vaulted to a new intraday high today, up 102 points to 16,840 as of 2:30 p.m. EDT, buoyed by promising and much-anticipated news out of Europe that offers up new hope for the eurozone's beleaguered economic recovery. All but a handful of the index's blue-chip member stocks are in the green so far. However, UnitedHealth Group's (NYSE:UNH) stock has fallen 0.7% to the bottom of the Dow. Let's catch up on what you need to know.

Big changes hit Europe

Mario Draghi

ECB President Mario Draghi. Source: Wikimedia Commons.

No story's dominated the market moves today like the European Central Bank's actions this morning. The ECB slashed its benchmark rate down to 0.15% and went further by launching a negative deposit rate of -0.1%, down from 0%, a move designed to push banks to lend money. The ECB also took up other measures but remained short of a full-on asset purchasing push. The decisions were enough to kick European stocks higher, with Germany's DAX (DAXINDICES:^DAX) advancing 0.2% today. In addition, ECB President Mario Draghi's latest actions don't preclude more aggressive moves, such as stimulus, if Europe can't emerge from the economic doldrums quickly enough.

At the core of the push is Europe's ongoing inflation problem. Overall eurozone inflation in May fell to 0.5%, and hard-hit nations such as Italy and Spain have seen inflation fall below that. The ECB's negative interest rate should give added motivation to banks to avoid sitting on piles of cash, as banks effectively will now have to pay to keep that money lying around. But there's more than just stagnant prices at risk in Europe: The continent has suffered through declining wage growth, threatening to stifle consumption around the eurozone and jeopardizing Europe's fragile recovery. If Draghi's moves today can't get Europe going soon, it wouldn't be surprising to see the ECB institute quantitative easing in a more aggressive move to stimulate the economic comeback.

Meanwhile, UnitedHealth's fall comes even after America's largest publicly traded health insurer today boosted its dividend by 34%. UnitedHealth also approved a 100-million share buyback program, but that hasn't inspired investors so far. The company is locked into a wide-scale overhaul in the insurance industry as top companies get used to the new landscape under the Affordable Care Act. Changes from the ACA, most notably cuts to Medicare Advantage payouts, hurt UnitedHealth's earnings in the first quarter, but there still are reasons to believe in this insurer's long-term approach.

UnitedHealth's dividend remains one of the top yields in the insurance industry, and this company's size and cautious approach to Obamacare's rollout will insulate investors from much of the turbulence as the new law's first year continues. Once early changes to Obamacare level out, expect UnitedHealth to make the most of the new law -- particularly in Medicaid, where the company has already grown subscriptions. The stock has gained nearly 8% this year; while UnitedHealth may not be able to sustain that success through the rest of the year, this stock should prosper over the long run.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers