Wall Street falls after comments from ECB head
Stocks fell on Thursday after remarks from European Central Bank President Mario Draghi tempered hopes policymakers were priming a much-anticipated financial bazooka to tackle Europe's raging debt crisis.
Draghi discouraged expectations the bank would massively step up buying of government bonds after a crucial Brussels summit on Friday. His comments, coupled with a stark warning about the health of the region's economy, overshadowed a cut in interest rates and extra liquidity provisions for banks.
With so many rumors and speculation about what could come out in the summit, it creates the kind of environment where the market whipsaws from optimism to pessimism like this, said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.
The decline comes after three days of gains for U.S. stocks when the S&P 500 tried and failed to stay above its 200-day moving average, a key level for investors to watch this year.
But Thursday's pullback, concentrated in economically sensitive areas, was a far cry from the wild swings of recent months when uncertainty over Europe has dominated headlines. That is being seen as a sign of resilience by many investors hoping for seasonal strength into the end of the year.
The market is holding in a lot better than I would have anticipated it doing, said David Lutz, managing director of trading at Stifel Nicolaus Capital Markets, Baltimore.
The S&P financial sector <.GSPF> was the biggest loser, falling more than 2 percent. That followed sharp losses in European banks as sources told Reuters the European Banking Authority (EBA) sees the capital shortfall at European banks at 114.7 billion euros ($154 billion).
The Dow Jones industrial average <.DJI> dropped 59.19 points, or 0.49 percent, to 12,137.18. The Standard & Poor's 500 Index <.SPX> fell 9.13 points, or 0.72 percent, to 1,251.88. The Nasdaq Composite Index <.IXIC> lost 12.48 points, or 0.47 percent, to 2,636.73.
France and Germany plan to use a key EU summit this week to lobby for their plan to amend the European Union treaty to toughen budget discipline, which they want to have ready by March. But several countries are skeptical.
The market really wants to wait until tomorrow to see what comes out of the summit, said Ken Polcari, a floor trader at NYSE with ICAP Equities. You are going to see the markets bounce around until tomorrow.
Losses were limited as U.S. jobless claims fell more than expected in the latest week, a sign the labor market recovery was gaining momentum. Claims fell to a nine-month low.
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Costco Wholesale Corp
McDonald's Corp
(Additional reporting By Ryan Vlastelica; Editing by Kenneth Barry)
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