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U.S. stocks dips as ECB holds off on stimulus; Dow falls 0.07%

Published 12/04/2014, 05:05 PM
Updated 12/04/2014, 05:07 PM
ECB decision to stay put on policy waters down U.S. share prices

ECB decision to stay put on policy waters down U.S. share prices

Investing.com - U.S. stocks slipped on Thursday after the European Central Bank refrained from implementing fresh stimulus measures to boost the economy, while uncertainty ahead of Friday's November jobs report kept investors on the sidelines as well.

At the close of U.S. trading, the Dow 30 fell 0.07%, the S&P 500 index fell 0.12%, while the Nasdaq Composite index fell 0.11%.

The S&P 500 VIX index, which measures the outlook for market volatility, was down 0.72% at 12.38.

The European Central Bank left interest rates on hold at their current record lows of 0.05% earlier Thursday, in a widely anticipated decision.

U.S. stocks dipped after ECB President Mario Draghi said the monetary authorities would reassess the success of its existing stimulus programs and the impact of weak oil prices on the euro area economy in the early part of next year.

He said the bank could potentially change the size, scale and composition of its existing stimulus programs. The governing council remains unanimous that it will take further measures if necessary, he added.

The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets have been keeping a close eye out for plans to announce purchases of government debt, a stimulus tool known as quantitative easing that boost stocks by suppressing long-term borrowing costs.

The bank's decision to remain in a wait-and-see mode dampened U.S. stocks on Friday, as fresh stimulus across the Atlantic would have boosted equities in Europe, home to many U.S. business partners.

The ECB substantially revised down its forecasts for growth and inflation and warned that the latest forecasts do not take into account the recent steep drop in oil prices.

The bank now expects the euro zone economy to grow by just 0.8% this year, 1.0% in 2015 and 1.5% in 2016. It cut its inflation forecast for this year to just 0.5% from 0.6% and to 0.7% in 2015 from 1.1%.

Meanwhile in the U.S., the Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Nov. 29 decreased by 17,000 to 297,000 from the previous week’s revised total of 314,000, in line with expectations.

On Friday, the Labor Department will release its November jobs report, and uncertainty ahead of time also kept many on the sidelines.

On Wednesday, payroll processor ADP reported that the U.S. private sector created 208,000 jobs in November, falling short of expectations for jobs growth of 223,000 and down from 233,000 in October.

Still, the number topped 200,000, which allayed fears that Friday's official November jobs report may indicate that the labor market may be softening, though many opted to wait for the official report to hit the wire before trading on the data.

Leading Dow Jones Industrial Average performers included Microsoft Corporation (NASDAQ:MSFT), up 1.60%, Procter & Gamble Company (NYSE:PG), up 0.64%, and American Express Company (NYSE:AXP), also up 0.64%.

The Dow Jones Industrial Average's worst performers included Chevron Corporation (NYSE:CVX), down 1.26%, UnitedHealth Group Incorporated (NYSE:UNH), down 1.12%, and General Electric Company (NYSE:GE), down 1.10%.

European indices, meanwhile, ended the day lower.

After the close of European trade, the Euro Stoxx 50 fell 1.74%, France's CAC 40 fell 1.55%, while Germany's DAX 30 fell 1.21%. Meanwhile, in the U.K. the FTSE 100 fell 0.55%.

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