Stocks slip as ECB stimulus disappoints
US stocks closed lower on Thursday, 08 September 2016 after the European Central Bank kept key interest rates steady but disappointed some by not announcing additional measures to boost Europe's sluggish economy. The stock market ended the Thursday affair modestly lower as the latest directive from the European Central Bank and commentary from ECB President Mario Draghi raised some concerns regarding the future of the central bank's asset purchase program.
The Dow Jones Industrial Average declined 46.23 points, or 0.3%, to close at 18,479.91. The S&P 500 closed down 4.86 points, or 0.2%, at 2,181.30. The Nasdaq Composite Index shed 24.44 points, or 0.5%, to close at 5,259,48, snapping a four-session winning streak.
There was 2.7% drops of both Nike and Apple dragging on the average. Apple shares fell after Wednesday's unveiling of its new iPhone and an updated Apple Watch. Oil prices surged to settle up $2.12, or 4.7%, at $47.62 a barrel following the largest drop in weekly inventories since 1999.
The major averages began the day on a lower note as inaction from the European Central Bank weighed on European bourses. The central bank held its key interest rates at record lows and maintained the size and scope of its asset purchases. During his press conference, President Draghi noted that the central bank did not see a need to expand the asset purchase program at this time. However, the central bank did affirm plans to continue purchasing assets through March 2017 or beyond, if needed.
Equities retraced opening losses through the first half of trade, benefiting from a rally in crude oil futures. The energy component rallied throughout the session as investors pored over a better-than-expected reading of the Department of Energy's weekly inventory data.
Crude oil futures logged their highest settlement in at least two weeks on Thursday, 08 September 2016 after U.S. government data revealed the largest drop in crude supplies since 1999. Oil prices also found support from Chinese data that showed another big increase in the country's crude imports.
October West Texas Intermediate crude added $2.12, or 4.7%, to settle at $47.62 a barrel on the New York Mercantile Exchange. That was the strongest dollar and percentage gain since April.
November Brent crude on London's ICE Futures exchange rose $2.01, or 4.2%, to $49.99 a barrel.
The 14.5 million-barrel decline reported by the Energy Information Administration was even larger than the surprise 12.1 million-barrel drop reported by the American Petroleum Institute late Wednesday. Ahead of both reports, market had expected a 425,000-barrel climb.
Bullion prices ended lower at Comex on Thursday, 08 September 2016. Gold futures settled lower on Thursday, extending losses from a day earlier, as the European Central Bank stood pat on rates and as investors looked ahead to policy moves by other global central bankers. On Thursday, the ECB held its benchmark rate steady as expected, and repeated a pledge to keep rates low for an extended period. The ECB, however, made no move to extend or modify its asset-buying program.
Today's economic data included weekly initial claims and Consumer Credit for July. Initial claims for the week ending 3 September dipped by 4,000 to 259,000 (consensus 265,000). The latest report marked the 79th straight week that initial claims have been below 300,000 and it dropped the four-week moving average for the series to 261,250 from 263,000. Continuing claims for the week ending August 27 decreased by 7,000 to 2.144 million.
Investors this week have also trimmed bets that the Fed will raise U.S. interest rates when the panel next meets in a couple of weeks after a surprisingly weak report on the U.S. service-sector on Tuesday. Data followed data last week that showed slower job growth in August and an unexpected pullback in ISM's index of monthly manufacturing activity. Thursday's data, which showed a drop to a two-month low for weekly jobless claims filings, did little to change the short-term economic picture.
Separately, total outstanding consumer credit increased by $17.7 billion in July (consensus $16.0 billion) after increasing an upwardly revised $14.5 billion (from $12.3 billion) in June. In the preceding 12-month period leading up to July, consumer credit had risen by an average of $17.3 billion.
Today's participation was above the recent average as more than 818 million shares changed hands on the NYSE floor.
Tomorrow's economic data will be limited to Wholesale Inventories for July (consensus 0.0%), which will cross the wires at 10:00 ET.
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