Stocks plunge as ECB disappoints
U.S. stocks sold off on Thursday, 03 December 2015 pushing both the Dow Industrials and the S&P 500 further into negative territory for the year, after the European Central Bank unveiled a smaller-than-expected expansion of its monetary stimulus program. Equity indices held slim gains at the open, but that proved to be a mirage as the market marched lower throughout the day after the European Central Bank made a slight adjustment to its interest rate corridor but did not increase the size of its asset purchases, thus disappointing a global equity complex that was hungry for more stimulus. The drop came amid a sharp surge in the euro and a selloff in government bonds and European stocks, while Federal Reserve chief Janet Yellen once again signaled a U.S. interest-rate hike in mid-December.
The Dow Jones Industrial Average dropped 251.74 points, or 1.4%, to 17,477.67, further into negative territory for the year. The Nasdaq Composite ended the session down 85.70 points, or 1.7%, to 5,037.53. The S&P 500 fell 29.88 points, or 1.4%, to 2,049.63. The benchmark index turned negative for the year.
All ten sectors ended in the red, paced by energy and health care sectors. Both sectors spent the day near the bottom of the leaderboard with energy retreating despite a 2.9% surge in crude oil, which settled at $41.09/bbl.
The regular meeting of the ECB saw the central bank make its easing move, lower the deposit rate by 0.1%. The dollar index had one of its worst losses this year, giving commodities a boost today.
The marketplace was still digesting some data and comments from the U.S. Federal Reserve on Wednesday. While containing no surprises, the Fed's beige book and comments from Fed Chair Janet Yellen reinforced notions the U.S. central bank will slightly raise U.S. interest rates in two weeksfor the first time in nine years. This did limit stronger buying interest in gold and silver markets on Thursday. Yellen delivered a speech and testimony on the economy to U.S. lawmakers on Thursday, but it was pretty much in line with what she said on Wednesday.
The important U.S. jobs report is due out on Friday. The key non-farm payrolls number is expected to be up around 205,000 in November. An OPEC oil cartel meeting also begins on Friday and will be closely watched by the market. There is talk Saudi
Economic data at Wall Street today included Initial Claims, Factory Orders, and ISM Services. Initial claims for the week ending November 28 were up 9,000 from the prior week to 269,000. That dropped the four-week moving average by 1,750 to 269,000, which is near a 15-year low. There were no special factors influencing initial claims, which have been bounded between 250,000 and 300,000 since July 2014. Continuing claims for the week ending November 21 were 2.161 million (consensus 2.177 million), an increase of 6,000 from a downwardly revised 2.155 million (from 2.207 million) for the prior week.
Separately, the ISM Non-Manufacturing Index for November fell to 55.9 from 59.1 while the consensus expected an increase to 58.3. The October reading was the second-highest reading for the index since December 2005. A number above 50.0 still denotes expansion and November marked the 70th consecutive month of growth in the non-manufacturing sector. Also, October Factory Orders increased 1.5% while the consensus expected an increase of 1.1%. The report showed new orders for manufactured durable goods increased 2.9%, which was a bit below the 3.0% increase reported in the Durable Orders report.
Oil futures rallied on Thursday, 03 December 2015 at Nymex as talk of a possible cut in production from the Organization of the Petroleum Exporting Countries and weakness in the U.S. dollar helped crude recoup nearly 3% of a decline that took the U.S. benchmark below $40 a barrel.
On the New York Mercantile Exchange, January West Texas Intermediate crude tacked on $1.14, or 2.9%, to settle at $41.08 a barrel. January Brent crude rose $1.35, or 3.2%, to $43.84 a barrel on London's ICE Futures exchange.
Today's selloff invited above-average participation as more than 990 million shares changed hands at the NYSE floor.
Tomorrow, November Nonfarm Payrolls (consensus 196K) and October Trade Balance (expected -$43.00 billion) will be reported at 8:30 ET.
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