The Closing Bell: U.S. Stocks Fall After ECB Signals A Rate Cut

Ted

FYI: U.S. stocks fell Thursday after the European Central Bank hinted it is preparing to cut key interest rates for the first time since early 2016, a sign that the global-easing cycle is gaining momentum.

The Dow industrials slid 128 points, or 0.47%, to 27140. The S&P 500 fell 0.52% and the technology-heavy Nasdaq Composite dropped 1.00.%, with both indexes easing from records hit a day earlier.

The European Central Bank signaled it is preparing to cut short-term interest rates and possibly restart its giant bond-buying program in a policy shift aimed at buffering the eurozone’s economy. The move comes as the Federal Reserve is set to cut rates for the first time in a decade next week, while central banks in Asia and South Africa lowered their borrowing costs earlier this month.

ECB President Mario Draghi signaled that looser policy was likely to follow if inflation continues to disappoint. The Stoxx Europe 600 lost 0.6% after the ECB’s announcement. The euro rose 0.1% to $1.115.

Policy makers are attempting to ward off signs of weaker economic growth. Investors will get another look at the health of the U.S. economy on Friday when the Commerce Department releases second-quarter growth data.

Meanwhile, data released Thursday suggested that demand for American manufactured goods could be firming. U.S. durable goods orders rose 2% in June, led by orders for transportation goods. Economists surveyed by The Wall Street Journal had anticipated a 0.5% increase.

The yield on 10-year Treasurys fell to 2.088%, from 2.052% Wednesday, according to Tradeweb. The WSJ Dollar Index, which measures the currency against a basket of peers, rose 0.2%

With a series of better-than-expected corporate results having recently supported markets, investors await a batch of earnings reports from Alphabet, Amazon.com, Intel and Starbucks later in the day.

In Thursday’s action, shares of Dow component Ford dropped 6.9%, on pace for its biggest one-day drop since January 2018, after the auto maker posted flat second-quarter operating income and a disappointing earnings outlook.

Tesla slid 14% after the electric auto maker reported a loss much larger than anticipated for the second quarter and missed on sales. Facebook’s stock fell 2.3%, a day after the social-networking giant brushed off a record-setting privacy fine to post strong earnings and revenue growth.

In commodities, the global oil benchmark Brent crude rose by 0.7% to $63.59 a barrel, as European powers struggled to cooperate on a plan to secure the Persian Gulf.

Elsewhere, Asian stocks rose broadly. South Korea’s Kospi was the exception with a decline of 0.4%.

Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-07-25/your-evening-briefing

MarketWatch:
https://www.marketwatch.com/story/stock-futures-trade-mixed-on-one-of-the-biggest-earnings-days-as-ecb-decision-looms-2019-07-25/print

WSJ:
https://www.wsj.com/articles/global-stocks-rise-ahead-of-ecb-policy-decision-11564041309

Bloomberg:
https://www.bloomberg.com/news/articles/2019-07-24/asian-stocks-set-for-muted-open-treasuries-gain-markets-wrap?srnd=premium

IBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-sinks-less-nasdaq-3-growth-stocks-soar-earnings/

CNBC:
https://www.cnbc.com/2019/07/25/us-stock-futures-tech-regulation-nasdaq.html

Reuters:
https://uk.reuters.com/article/us-usa-stocks/wall-st-declines-on-weak-earnings-reports-ecb-statement-idUKKCN1UK1IC

U.K:
https://uk.reuters.com/article/uk-britain-stocks/diageo-unilever-drag-ftse-100-astrazeneca-outshines-idUKKCN1UK0RO

Europe:
https://www.reuters.com/article/us-europe-stocks/european-shares-sink-as-draghi-disappoints-rate-cut-bulls-idUSKCN1UK0SO

Asia:
https://www.cnbc.com/2019/07/25/asia-semiconductor-stocks-ecb-currencies-in-focus.html

Bonds:
https://www.cnbc.com/2019/07/25/treasury-yields-fall-key-central-bank-meetings.html

Currencies:
https://www.cnbc.com/2019/07/25/forex-markets-euro-european-central-bank-in-focus.html

Oil:
https://www.cnbc.com/2019/07/25/oil-markets-global-demand-in-focus.html

Gold:
https://www.cnbc.com/2019/07/25/gold-markets-dollar-ecb-in-focus.html

WSJ: Markets At A Glance:
https://markets.wsj.com/us

Major ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitor

SPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker

SPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectors

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