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Wall Street slips as focus shifts from ECB to Fed, oil drops

Published 03/10/2016, 12:15 PM
© Reuters.  U.S. stocks drop after historic ECB move as oil slips

Investing.com – With U.S. market participants digesting the historic measures taken by the European Central Banks (ECB) on the other side of the Atlantic, Wall Street was unable to keep up the investing enthusiasm in a session where, stateside, better-than-expected weekly jobless claims continued to show a firming U.S. labor market and oil dropped as hopes for an agreement to freeze production in a March meeting among oil producers were dashed.

At 17:08GMT or 12:08 ET, the Dow 30 dropped 74 points or 0.43%, while the S&P 500 gave up 7 points or 0.37% and the tech-heavy NASDAQ Composite traded down 21 points or 0.45%.

Investors’ eyes were glued to events in Frankfurt on Thursday as the European Central Bank (ECB) pulled out all the stops to reinforce the recovery in the euro area economy and announced unprecedented measures to combat deflation in the single-currency region that included cutting the interest rate to a historic low of zero, pushing the deposit rate further into negative territory, increasing and widening the scope the of its quantitative easing (QE) program or announcing a new round of targeted longer-term refinancing operations to spur credit creation.

The announcement of these historical measures initially drove the euro to intraday lows, but the currency recovered and rallied more than 300 pips against the dollar after ECB chief Mario Draghi suggested that he didn’t see the need for further cuts. Despite reiterating later in the press conference that while the current situation didn’t call for additional measures, the economic situation could change, EUR/USD continued to rally and, at 17:11GMT or 12:11 ET, traded near Thursday’s high with gains of 1.60% to 1.1175.

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Back stateside, investors watched as initial jobless claims fell more-than-expected to a 5-month low and remained below levels consistent with a firming labor market.

The data point will act as one of the final references for the Federal Reserve (Fed) to digest before making its own monetary policy decision on March 16.

Though experts didn’t forecast a move at the next meeting, a Bloomberg survey published on Thursday showed that expected language changes to the statement have 27% of economists polled thinking focus will shift to June and 16% considering that a rate move could come as early as April.

A similar poll from Reuters showed that economists polled gave a 60 percent chance of rates rising by mid-year, encouraged in part by a strong jobs report for February

Meanwhile, oil prices dropped as hopes faded for a March 20 meeting in Russia among major oil producers to produce a production freeze. A Reuters report citing sources familiar with the matter suggested that the meeting may not even take place due to Iran’s unwillingness to come to an agreement.

U.S. crude futures fell 1.93% to $37.55 by 17:12GMT or 12:12 ET, while Brent oil traded down 2.65% to $39.98.

In reactions to earnings news, the balance was tilted to the positive side as Box Inc (NYSE:BOX) jumped almost 3% after the enterprise technology company beat on revenue and projected a 30% annual sales growth.

Dollar General (NYSE:DG) soared more than 6% after reporting update quarterly earnings.

Party City (NYSE:PRTY) skyrocketed near 18% despite a worse-than-expected earnings report as investors appeared to find solace in the retailer for party supplies’ positive comments on sales so far this year and recent cuts in expenses.

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In the red, payments technology company Square (NYSE:SQ) also saw shares plummet more than 7% after reporting a worse-than-expected loss.

Lastly, Vail Resorts (NYSE:MTN) lost 4% despite beating the street.

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