Benchmarks soared to new multi-year highs on Thursday following news that the ECB had agreed on a bond purchase plan that will strive to combat the region’s intensifying debt crisis. Separately, jobs data on the domestic front was positive, helping markets widen their gains. Eventually, the Dow was at its best level since 2007, the S&P 500 hit the highest mark since 2008, and the Nasdaq soared to its biggest level since 2000.

The Dow Jones Industrial Average (DJI) soared 244.52 points or 1.9% to end at 13,292.00. The Standard & Poor 500 (S&P 500) surged almost 2.1% to finish yesterday’s strong rally at 1,432.12. The tech-laden Nasdaq Composite Index surged 2.2% to close at 3,135.81. Amidst such robust gains, the 12.1% slump in the fear-gauge CBOE Volatility Index (VIX), which settled at 15.60, further reflected investors’ confidence. Total volume on the New York Stock Exchange was 3.96 billion shares. Advancers easily outnumbered declining stocks on the NYSE; as for 77% stocks that gained, only 20% stocks closed lower.

Benchmarks last witnessed such high levels long ago when the recession had just begun around four years ago. In fact, the Nasdaq jumped to levels it last witnessed in 2000, during the Dotcom bubble. These new multi-year highs were primarily due to what European Central Bank (ECB) President Mario Draghi had to announce.

Following the ECB meeting, Mario Draghi said the ECB has agreed to buy back government bonds of embattled Euro-zone nations. Draghi said: “The Governing Council decided on the modalities for undertaking Outright Monetary Transactions (OMT) in secondary markets for sovereign bonds in the euro area”. The bond purchase would help nations such as Italy and Spain to control their burgeoning borrowing costs.

The central bank is aiming to restore the ‘singleness’ of its monetary policy. Speaking at a press conference in Frankfurt, Draghi stated that “OMTs will enable us to address severe distortions in government bond markets, which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro”. The onus lies on the countries’ governments now, as they will have to seek help from Europe’s rescue funds. Draghi said: “"Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist - with strict and effective conditionality”.

While the new bond purchase plan sparked off a strong rally, positive domestic jobs data also played a key role in ensuring that benchmarks achieved new multi-year highs. While the U.S. Department of Labor announced a bigger-than-expected drop in initial claims; Automatic Data Processing, Inc.’s (NASDAQ:ADP) National Employment Report revealed that US companies added jobs at the fastest pace in five months in August.

According to the Labor Department’s report, the advance figure for seasonally adjusted initial claims was at 365,000 during the week ending September 1, down 12,000 from prior week. Consensus estimates had projected initial claims to come in at 372, 000. While initial claims data lifted sentiment, the ADP National Employment Report revealed that U.S. nonfarm private business sector employment jumped 201,000 from July to August. According to the report: “Employment in the private, service-providing sector expanded 185,000 in August, up from 156,000 in July. Employment in the private, goods-producing sector added 16,000 jobs in August. Manufacturing employment rose 3,000, following an increase of 6,000 in July”.

Coming to the individual sectors, the financial sector was a major gainer and the Financial Select Sector SPDR (XLF) soared 2.4%. Among the stocks, Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC), U.S. Bancorp (NYSE:USB), Morgan Stanley (NYSE:MS) and Charles Schwab Corp (NYSE:SCHW) jumped 3.3%, 4.3%, 4.5%, 3.2%, 2.6%, 3.6% and 4.7%, respectively.