Investors shrug off new easing measures from the European Central Bank
U.S. stocks came off session lows to close slightly lower Thursday, 11 March 2016 as a rout in oil prices weighed on the main benchmarks. Investors largely shrugged off new easing measures from the European Central Bank, which exceeded the market's expectations and fueled an early-morning rally.
The Dow Jones Industrial Average closed 6 points, or less than 0.1%, to 16,994. Meanwhile, the Nasdaq Composite closed down 12 points, or 0.3% at 4,662. The S&P 500 ended unchanged at 1,989, led by losses in industrials and technology sector.
The stock market endured a shaky session on Thursday as the major averages backed away from recent rebound highs. Today's trade took on a sell the news posture despite the ECB's latest policy statement exceeding investors expectations regarding the size and scope of the central bank's easing program. Earlier Thursday, the ECB's stimulus, which exceeded investor expectations, had given stocks a lift because it assuaged some of the market's concerns about a global economic slowdown on hopes that the European economy will continue to strengthen.
The ECB cut the bank's key lending rate to zero from 0.05% and pushed the rate on its deposit facility to minus 0.4% from minus 0.3%. It also announced it would expand the size of its monthly bond purchases to 80 billion ($86.86 billion) from its current level of 60 billion beginning in April and expand the scope of those purchases to include investment-grade, euro-denominated, nonbank corporate bonds. The ECB's actions come a week ahead of the Federal Reserve's policy meeting March 15-16. The Fed has said it is on a path to raising rates, which differs from the ECB's current moves.
Bullion prices ended solidly higher on Thursday, 11 March 2016 at Comex. Gold prices poised to close at or near a 13-month high close in late U.S. trading on Thursday. Safe-haven demand surfaced as U.S. stock indexes sold off and the U.S. dollar index dropped sharply in the wake of today's announcement of the monetary policy easing measures from the European Central Bank. Gold and silver each rose 1.2% in pit trade today. April gold ended at $1272.80/oz, while May silver finished at $15.55/oz.
The dollar rallied initially following the ECB decision. However, following domestic economic data, the dollar began to slide lower. The weakness in the dollar helped give select commodities a boost today.
In overnight news, China's consumer price inflation was a bit hotter than expected, which did put some downside pressure on China's stock indexes, with the Shanghai index down around 2% on the day. The higher-than-expected inflation data makes it more difficult for China's central bank to initiate monetary policy easing measures.
Today's economic data at Wall Street included weekly initial and continuing claims and the Treasury Budget for February. Initial claims for the week ending March 5 were 259,000 (consensus 275,000), a decrease of 18,000 from the prior week. There were no special factors behind the drop in claims, which are at the lower end of the 250,000 to 300,000 range that has persisted since July 2014. The four-week moving average fell to 267,500 from 270,000. Continuing claims for the week ending February 27 were 2.225 million (consensus 2.251 million), a decrease of 32,000 from the prior week. The latest reading left the four-week moving average for continuing claims at 2.252 million versus 2.257 million previously.
Separately, the Treasury Budget for February showed a deficit of $192.6 billion, nearly matching the deficit of $192.4 billion for the same period a year ago. The Treasury data are not seasonally adjusted, so the February deficit cannot be compared to the January surplus of $55.2 billion. Total receipts in February were $169.1 billion while total outlays were $361.8 billion. Receipts were $29.8 billion more than receipts in February 2015 while total outlays were $30.0 billion more than February 2015. The 12-month deficit was little changed at $405.52 billion versus $405.26 billion in January.
Crude oil prices settled lower on Thursday, 10 March 2016 at Nymex retreating from their highest levels of the year reached a day earlier, as doubts emerged over a potential meeting this month between crude producers regarding a freeze in output.
April West Texas Intermediate crude shed 45 cents, or 1.2%, to settle at $37.84 a barrel on the New York Mercantile Exchange. It pared its decline as the U.S. dollar moved sharply lower. May Brent crude on London's ICE Futures exchange declined $1.02, or 2.5%, to $40.05 a barrel.
Oil prices had soared Wednesday following U.S. Energy Information Administration data that showed a much larger-than-expected drawdown in gasoline stocks last week, suggesting robust energy demand in the U.S. The 4.5 million-barrel decline in gasoline stocks outweighed the 3.9 million-barrel growth in crude inventories.
Today's participation fell in-line with the recent average as more than 1.019 billion shares changed hands at the NYSE floor.
Tomorrow's economic data will be limited to Febraury Import/Export Prices, which will be reported at 8:30 ET.
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