US Stocks Drop Despite ECB Move

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US Stocks Drop Despite ECB Move

US stocks dropped on after the European Central Bank announced increased measures to stimulate the sagging economy of the region, while shares of certain US bellwether companies dropped on disappointing results.

The ECB will purchase 60 billion euros worth of assets every month, more than expected, in the program, which will last until September 2016.

US  stocks were volatile as ECB president Mario Draghi talked, shifting between modest losses and solid gains, while Europe shares rose 1%.

Reuters quoted Rex Macey, chief allocation officer at Wilmington Trust Investment Advisors as having said, “The news was widely anticipated and built into the market, and if anything, the fact that more bonds will be bought than expected could just mean that conditions are worse than we thought.”

US jobless claims dropped from a high of seven months in the last week, but the decline was lower than estimated.

Macey added, “We’re satisfied with the earnings season, not disappointed or impressed. However, we’re not seeing anything that looks like a screaming buy.”

Nasdaq reported that the Dow Jones Industrial Average climbed 0.4% or 71.54 points at 17,625.82 and the Nasdaq Composite Index climbed 0.5% or 22.05 points at 4,689.47. The S&P 500 rose 0.5% r 10.87 points to 2,042.99.

Chief market analyst at the Lindsey Group, Peter Boockvar said, “The action in stocks is just Pavlovian to any form of central bank accommodation and today is no different. The transmission though of these newly printed euros into actual stock purchases is specious and thus buying stocks on ECB QE news is more superstition than based on substance in the US.”

The Nikkei 225 Index of Japan rose 0.3% and the Hang Seng Index of Hong Kong climbed 0.7%.

Major markets in Europe moved to the upside. The CAC 40 Index of France surged higher by 1.3% while the FTSE 100 Index of UK and the DAX Index of German rose 0.9%.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com