Stocks Lose Steam on Wall Street; ECB Lowers Inflation, Growth Targets

Nichole Harper
03 Sep, 2015
New York City

Investors looked ahead to the monthly employment data release tomorrow. Global markets gained in quiet trading and bond yields fell in the euro zone after the European Central Bank trimmed growth and inflation outlook.

[R]2:55 PM New York City, New York – Investors looked ahead to the monthly employment data release tomorrow. Global markets gained in quiet trading and bond yields fell in the euro zone after the European Central Bank trimmed growth and inflation outlook.[/R]

Market indexes opened higher for the second day in a row on Wall Street but steadily pared gains as trading progressed.

By midday trading, Nasdaq and S&P 500 indexes had dipped below yesterday’s closing and struggled to recover in the final two hours of trading.

Skittish investors looked ahead to the monthly employment data on Friday and reacted calmly to the better-than-expected initial jobless claims at the end of last week.

Seasonally adjusted weekly jobless claims rose 12,000 to 282,000 from the previous week revised claims of 270,000, the Department of Labor said.

Trade deficit in July narrowed $3.3 billion to $41.9 billion from revised $45.2 billion in June. Exports in July grew $0.8 billion but imports fell $2.5 billion from June, the Department of Commerce reported.

On Wall Street, Tollbooth Strategy Index increased 80.08 or 0.7% to 10,334.32.

S&P 500 index gained 16.24 or 0.8% to 1,965.09 and the Nasdaq Composite Index rose 25.43 or 0.5% to 4,776.39.

Crude oil in New York jumped $1.01 to $47.26 a barrel and gold fell $11 to $1,122.60 an ounce.

European Central Bank left its reference rate on hold as expected but tweaked its bond purchase program and said it is prepared to buy more or prolong its bond purchase program if macroeconomic pictures weakens.

The central bank lowered its estimate of economic growth in the euro zone to 1.4% in 2015 from the previous estimate of 1.5%.

Inflation outlook was set at 0.1%, far below the central bank’s target of 2% highlighting the lack of economic response to recent monetary steps from the central bank.

U.S. Movers

AOL Inc ((AOL)) closed unchanged at $49.99 after the Verizon Communications Inc.’s subsidiary agreed to acquire ad technology company Millennial Media Inc. for about $250 million, a 31% premium to closing price yesterday.

Lannett Company, Inc ((LCI)) surged 14.4% or $7.14 to $56.57 after the pharmaceutical company agreed to acquire Kremers Urban Pharmaceuticals, Inc, the U.S. specialty generic pharmaceuticals maker for about $1.23 billion.

European Markets

Seasonally adjusted July retail sales rose 0.4% compared to June in euro area and 0.3% in the wider region EU28.

In June, retail sales fell 0.2% in the euro area and 0.1% in the EU28, the Statistical Office of the European Communities said.

In London trading, FTSE 100 index jumped 111.36 or 1.8% to 6,195.60 and in Frankfurt the DAX index increased 225.57 or 2.2% to 10,274.02.

In Paris, CAC 40 index soared 94.16 or 2.1% to 4,649.31.

easyJet plc soared 6.1% to 1,774 pence after the U.K.-based airline company lifted profit forecast for the year ending in September between £675 million to £700 million from earlier estimated range of £620 million to £660 million.

The airliner said passenger numbers in August were 7.06 million, second monthly count above 7 million and jumped 6.8% from a year ago month.

Load factor increased 0.2 percentage point to 94.4% from 94.2% in July.

Asian Markets

Nikkei average in Tokyo closed higher and the yen strengthened in thin trading. Nikkei traded above 18,000 but investors worried that the quarter profit may fall below expectations.

Asian and Japanese markets staged a mild rebound following higher closing in international markets in overnight trading.

Market indexes rebounded after widely followed indexes in New York and Europe closed up nearly between 0.7% and 1.5%.

Market sentiment was still tentative in Tokyo on the growing uneasiness about the economic slowdown in China and sharp fall in commodities prices.

Japanese government is set to announce its preliminary spending request for the next fiscal year beginning April 2016.

The current fiscal year spending topped 96 trillion yen and Prime Minister Shinzo Abe has requested various ministries to curtail spending without setting targets.

The Nikkei 225 Stock Average gained 86.99 or 0.5% to 18,182.39 and the broader Topix index rose 8.99 to 1,474.98.

The yen strengthened to 120.29 against a dollar.

Market indexes in Mumbai advanced after global markets stabilized and investors focused on the current quarter economic growth outlook.

Rupee weakened 6 paisa to 66.24 against one U.S. dollar.

The Sensex Index advanced 311.22 or 1.2% to close at 25,764.78. The CNX Nifty increased 106 or 1.4% to 7,823.

Volatile Sensex in Mumbai jumped up more than 1% following relative stability in world markets.

Punj Lloyd plans to invest $300 million to expand its defense facilities.

VA Tech received an order from Malaysia-based Petronet worth $250 million.