Closing Market Summary: Averages End Lower as ECB DisappointsThe 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 Nasdaq Composite (-0.5%) finished behind the Dow Jones Industrial Average (-0.3%) and the S&P 500 (-0.2%).
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. The EIA reported that crude oil stockpiles fell by 14.51 million barrels (consensus: +0.22 million) while gasoline inventories declined by 4.21 million barrels (consensus: -0.71 million). WTI crude ended the day higher by 4.8% ($47.66/bbl; +$2.18).
Sellers pressed the broader market shortly after midday as heavily-weighted consumer discretionary (-0.8%) and technology (-0.9%) weighed. The benchmark index managed to maintain technical support near the 2180/2175 price level, finishing the day above its 20-day simple moving average (2180.50). Seven sectors ended in the red with consumer staples (-0.5%), consumer discretionary (-0.8%), and technology (-0.9%) leading to the downside. Conversely, health care (+0.1%), utilities (+0.4%), and energy (+1.7%) topped the board.
The influential technology sector (-0.9%) lagged as top-weighted Apple (AAPL 105.52, -2.84) fell 2.6%. The Dow component was under pressure after announcing that it will no longer release iPhone pre-orders figures. However, the company did reaffirm its fourth-quarter guidance. Meanwhile, Hewlett Packard Enterprise (HPE 21.38, -0.71) declined by 3.2% after reporting a mixed quarter and issuing below-consensus guidance for the fourth quarter.
In the consumer discretionary space (-0.8%), department store names underperformed following the Goldman Sachs 23rd Global Annual Retailing Conference. Kohl's (KSS 43.01, -1.16) and Macy's (M 36.00, -1.19) ended lower by 2.7% and 3.2%, respectively. Elsewhere, Dow component Nike (NKE 56.17, -1.55) ended behind the price-weighted index, declining 2.7%. The stock was under pressure after being downgraded to "Neutral" from "Overweight" at Piper Jaffray.
Biotechnology demonstrated relative strength, evidenced by the 0.7% gain in the iShares Nasdaq Biotechnology ETF (IBB 288.03, +1.93). The sub-group finished ahead of the broader health care space (+0.1%) as Alexion Pharmaceuticals (ALXN 130.06, +4.97) outperformed. Meanwhile, Mylan Labs (MYL 40.57, +0.26) rebounded 0.7%. In the broader sector, Eli Lilly (LLY 79.89, +1.30) jumped 1.7% after being upgraded to "Overweight" at JP Morgan.
Treasuries ended sharply lower with the long end of the curve demonstrating relative weakness. The yield on the 10-yr note rose seven basis points (1.61%) while the yield on the 2-yr note ticked higher by three basis points (0.77%).
Today's participation was above the recent average as more than 818 million shares changed hands on the NYSE floor.
Today's economic data included weekly initial claims and Consumer Credit for July:
- Initial claims for the week ending September 3 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.
- The four-week moving average for continuing claims fell to 2.154 million from 2.158 million.
- 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.
Tomorrow's economic data will be limited to Wholesale Inventories for July (consensus 0.0%), which will cross the wires at 10:00 ET.
- Russell 2000: +10.7% YTD
- S&P 500: +6.7% YTD
- Dow Jones: +6.1% YTD
- Nasdaq: +5.0% YTD