European Central Bank announces its decision to leave interest rates unchanged
The major U.S. indices had a mixed outing on Thursday, 07 September 2017 settling near their unchanged marks despite another disappointing performance from the heavily-weighted financial sector and risk-off signals from other financial markets. Prior to Thursday's opening bell, the European Central Bank announced its decision to leave interest rates unchanged.
Investors sold financials, consumer-discretionary and telecommunication shares, with Disney and Goldman Sachs exacting a hefty toll on the Dow industrials. Investors were tracking Hurricane Irma and registering the latest policy stance from European Central Bank President Mario Draghi's.
The Dow Jones Industrial Average lost 22.86 points, or 0.1%, to close at 21,784.78. The tech-heavy Nasdaq Composite Index eked out a slight gain, up 4.55 points, or 0.1%, at 6,397.37. The S&P 500 finished the session down 0.44 point, or less than 0.1%, at 2,465.10.
ECB President Mario Draghi added that the central bank will make a decision on its quantitative easing program later this year and risks to the outlook remain balanced. He also noted that the ECB is not targeting an exchange rate, but the level will factor into policy decisions.
Walt Disney fell 4.4% after the entertainment giant's CEO Bob Iger lowered Wall Street's full-year guidance for earnings. Shares of Goldman Sachs also weighed on the average, down 1.4%.
Banking stocks fell sharply following a drop in the 10-year Treasury note yield which declined nearly 5 basis points to 2.061%. Lower bond yields can undercut banks' business models of borrowing short-term and lending long.
Separately, Apple saw its shares trading lower after The Wall Street Journal reported that it was facing production delays in the making of its new iPhone 8. Its shares closed down 0.4%.
Another Dow component, General Electric tumbled to a 2-year low after analysts at J.P. Morgan Chase & Co. said the outlook for the industrial conglomerate was worse than his previous estimates. Shares were off 3.6%.
U.S. oil prices closed lower on Thursday, 07 September 2017 after the U.S. government reported the first climb for domestic crude inventories in 10 weeks, of U.S. stocks data, as Gulf storm Harvey caused refinery shutdowns in Texas, reducing demand for the commodity. Gasoline futures eased back for a fourth-straight session, despite a hefty weekly drop in U.S. stockpiles, with refinery capacity improving as floodwaters from the storm recede.
October West Texas Intermediate crude fell 7 cents, or 0.1%, to settle at $49.09 a barrel on the New York Mercantile Exchange. November Brent crude edged up by 29 cents, or 0.5%, to $54.49 a barrel.
Early Thursday, the U.S. Energy Information Administration said domestic crude supplies climbed by 4.6 million barrels for the week ended 1 September 2017. The rise followed nine-consecutive weeks of declines. Market had forecast a rise of 2.7 million barrels for crude stocks, but a survey from The Wall Street Journal showed expectations for a larger rise of 5 million barrels. The American Petroleum Institute reported Wednesday that U.S. crude supplies rose 2.8 million barrels last week.
Bullion prices ended higher at Comex on Thursday, 07 September 2017. Gold climbed on Thursday to mark a one-year closing high as the euro strengthened against the dollar in the wake of a European Central Bank meeting, boosting investment demand for the precious metal.
Gold for December delivery rose $11.30, or 0.8%, to settle at $1,350.30 an ounce, following a 0.4% loss it a day earlier. The settlement was highest since Sept. 6, 2016. Silver for December delivery rose 20.6 cents, or 1.2%, to $18.116 an ounce, the highest since April 19.
Data on Thursday showed weekly jobless claims rose by 62,000 to 298,000 in the wake of Hurricane Harveythe highest level since spring 2015. In addition, second quarter unit labor costs were revised downward to +0.2% (consensus +0.3%) from +0.6% in the preliminary reading. Meanwhile, second quarter productivity was revised upward to +1.5% (consensus +1.2%) from +0.9% in the preliminary reading. The key takeaway from the report is that the subdued growth in unit labor costs will contribute to the market's thinking that the Fed has scope to hold off on another rate hike this year.
The euro rose firmly against the U.S. dollar following the ECB's decision to leave interest rates unchanged. In a news conference, the central bank's President Mario Draghi indicated that the long-awaited decision on how and when to taper the ECB's asset purchases would likely come in October.
Against this backdrop, a key measure of the greenback, the ICE U.S. Dollar Index was off 0.7% at 91.673. Gold and the U.S. unit typically move inversely as gold priced in greenbacks is more attractive to investors using another currency.
On Friday, investors will receive just two pieces of economic data, July Wholesale Inventories (consensus 0.4%) and July Consumer Credit (consensus $15.0 billion). The two reports will be released at 10:00 ET and 15:00 ET, respectively.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
