U.S. stocks posted a fourth consecutive day of losses as the European Central Bank hinted at worsening economic conditions in the eurozone.
The S&P 500 (^GSPC) fell 0.81%, or 22.52 points, as of market close. The Dow (^DJI) fell 0.78%, or 200.23 points, while the Nasdaq (^IXIC) declined 1.13%, or 84.46 points.
The ECB on Thursday left its key interest rates unchanged and unveiled a new loan program to help support eurozone banks. The ECB left its primary refinancing and deposit rates unchanged at 0% and negative 0.4%, respectively, matching consensus expectations. The rate on marginal lending facilities was also held at 0.25%, as expected. The ECB added that it will not hike its key rates at least through the end of 2019 and announced a series of quarterly Targeted Longer-Term Refinancing Operations (TLTRO) starting this September through March 2021.
The dovish decisions are seen as efforts to boost the eurozone economy, which has been one of the areas at the center of global growth concerns. Seasonally adjusted GDP in the 19-member euro area grew 1.1% in the fourth-quarter over the year prior, below expectations of 1.2% growth, according to a Eurostat release Thursday.
ECB President Mario Draghi in a press conference Thursday pointed to a “sizable moderation in the pace of economic expansion that will extend into the current year.” The central bank cut its growth forecast for the eurozone to 1.1%, down from the 1.7% projection it gave in December.
“Sometimes intervening makes things worse. This is perhaps the lesson that the ECB has learned today. Their attempt to shore up sentiment with a new TLTRO program has set the cat among the pigeons, spooking markets with an indication that the eurozone economy is going to get worse before it gets better,” Chris Beauchamp, chief market analyst for IG Group, wrote in an email. “Despite their barnstorming performance since Christmas, markets remain acutely sensitive to hints that the economic situation will worsen, and as a result were are seeing far more than ‘tiny steps’ from indices.”
Elsewhere, domestic crude oil prices edged higher after settling lower Wednesday following a report that U.S. crude stockpiles rose by a larger-than-expected 7.07 million barrels last week. West Texas Intermediate crude oil prices (CL=F) rose by 44 cents to $56.66 per barrel as of Thursday’s settlement, and are up about 25% for the year-to-date.
Meanwhile, the Trump administration has so far provided scant details on the shape of a U.S.-China trade deal, which could come to fruition as soon as this month. Reports over the past several weeks have pointed to an impending deal to address the tariffs each country has imposed on one another’s goods, but a near-term agreement may not hit on some of the structural changes Washington has demanded of China with regard to alleged intellectual property theft and forced technology transfer.
Ongoing tensions between a major Chinese tech giant and the U.S. government have continued against a backdrop of U.S.-China trade negotiations.
Telecommunications company Huawei is suing the U.S. government and filed a lawsuit Thursday in Texas, where Huawei has an American headquarters, challenging a U.S. law banning federal agencies from purchasing its products. Huawei, one of the biggest global smartphone makers, is alleging that a portion of the National Defense Authorization Act that Trump signed in August is unconstitutional because it targets a single company for punishment without a trial.
On Saturday, the longest bull market on record in the U.S. turns 10 years old. The S&P 500 has returned an annualized 17.68% total return since March 9, 2009, according to Howard Silverblatt of S&P Dow Jones Indices. On a stock basis, the S&P 500 has gained $17.536 trillion – not including the $3.3 trillion in dividends over this decade-long period. Between March 9, 2009, and market close Wednesday, the S&P 500 has surged 310% to 2,771.45 from 676.53.
STOCKS
Kroger (KR) shares tumbled after the company provided an outlook for fiscal 2019 that fell short of consensus estimates. The grocer said it sees full-year earnings per share in the range of $2.15 to $2.15 per share, falling short of expectations of $2.28, according to Bloomberg data. Fourth-quarter adjusted earnings of 48 cents fell 5 cents short of expectations, and quarterly sales of $28.09 billion fell short of estimates of $28.37 billion. It also said its identical-store sales excluding fuel were up 2% for the full year 2019, below the 2.25% growth rate expected.
Burlington Stores (BURL) fell short of Wall Street’s estimates for 2019 earnings, with the company delivering a guidance range for adjusted earnings between $6.93 and $7.06 per share for the year, versus estimates of $7.08. In the first quarter, the discount retailer expects to earn between $1.21 and $1.31 per share on an adjusted basis, with the upper bound 5 cents short of expectations. Full-year comparable sales are expected to grow between 1.5% and 2.8%, while first quarter comp sales are seen to be flat to up 2%. Revenue for the fourth quarter was $2 billion, slightly below expectations of $2.05 billion, while comparable sales growth of 1.3% was short of estimates of a 3% increase.
ECONOMY
Initial jobless claims fell to a seasonally adjusted 223,000 for the week ending March 2, according to a Department of Labor release Thursday. This was lower than the 225,000 new unemployment claims expected, and the week prior’s upwardly revised level of 226,000. Continuing unemployment claims for the week ending February 23 declined to 1.755 million, lower than the 1.772 million expected and the 1.805 million continuing claims from the week prior.