The Dow, which is riding its longest daily winning streak in more than three years, opened lower Thursday on mixed U.S. earnings reports and the
After the opening bell, the Dow Jones industrial average was off about 30 points, or 0.2%. The Dow has finished higher nine straight sessions, its longest run without a down day since March 2013. The blue chip stock gauge has rallied nearly 700 points during the streak.
The Dow, which notched its seventh straight record high Wednesday, was dragged down early Thursday by component Intel (INTC), whose shares fell more than 2% after the company's revenue fell short of estimates in its quarterly results released last night. Shares of American Express (AXP), another Dow component, were also trading 1% lower after a similar revenue miss.
The benchmark Standard & Poor's 500 stock index fell 0.1% and the Nasdaq composite was up 0.1%. The S&P 500 on Wednesday hit a new high of 2173.02.
The ECB meeting was its first since Britain voted to exit the European Union on June 23. Its decision to stand pat was not a surprise as Wall Street expected the central bank to hold off on fresh stimulus measures until they get more data and can better measure the economic fallout from 'Brexit'.
In a statement, the ECB said it left all key rates at current levels, including the main deposit rate, which remains at -0.4% to induce banks to lend rather than horde cash. In addition, the ECB also said it would continue to purchase 80 billion euros worth of assets -- mostly government bonds -- each month through March 27 or beyond in an effort to lower borrowing costs and stimulate the eurozone economy.
Heading into the ECB meeting, Peter Rosenstreich, head of market strategy at Swissquote Bank, said: "We expect the meeting and press conference to contain warnings that economic downside risks have grown and that the bank remains ready to ease monetary policy further, if necessary."
Back at home, investors are also keeping a close eye on second-quarter earnings season and presidential politics, with GOP presidential nominee Donald Trump set to deliver a key speech tonight on the final night of the Republican National Convention.
Before the opening bell, Southwest Airlines (LUV) fell short of earnings per share and revenue estimates, pushing shares down more than 3%. Homebuilder Pulte Group(PHM) topped expectations, lifting shares nearly 3%. On the bullish side, automakerGeneral Motors (GM) topped profit forecasts by 34 cents a share, pushing shares up more than 5%.
Overall, heading into Thursday profits for the S&P 500 in the April thru June quarter are estimated to contract 3.8%, putting earnings on track for a fourth straight quarter of negative growth, according to earnings-tracker Thomson Reuters . Of the 70 S&P 500 companies that have already reported results, 67% have topped expectations, which is better than the average beat rate of 63%.
The big run up in stocks in recent weeks has pushed up stock prices to levels that have some Wall Street pros worried about overvaluation.
The nearly 9% surge for the large-company Standard & Poor's 500 index since the late-June post-'Brexit' low has pushed its price-to-earnings ratio — a common valuation metric — to 17.2. The market's current valuation is well above the 15 times earnings it was trading at in February at the 2016 lows and pricier than the average P-E of 14.7 going back almost 50 years, data from Thomson Reuters show.
ECB : holding rates steady
The European Central Bank kept interest rates unchanged on Thursday but left the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.
Signalling a readiness to act, ECB President Mario Draghi argued that Britain's decision to leave the European Union and weak emerging market growth both dampen the euro zone's own outlook, leaving the balance of risks tilted firmly to the downside and possibly requiring action.
But Draghi also noted that growth and inflation were both moving along the path projected in June so more evidence, including fresh staff projections in September, were needed before any decision.
"If warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate," Draghi said. "So I would stress readiness, willingness, ability to do so."
The balanced comments give the ECB time until its September meeting to weigh the economic costs of Brexit without fuelling excessive market expectations, potentially leading to disappointment, even if it does decide to act.
Indeed, the euro and German yields were broadly unchanged late on Thursday with little volatility during Draghi's news conference.
"All in all, today's meeting was one that will quickly disappear from memories," ING economist Carsten Brzeski said. "More action in September is possible but not yet a given."
Keeping its deposit rate at minus 0.4 percent and the main refinancing rate at 0.00 percent, the bank reaffirmed its guidance to keep rates at current or lower levels for an extended period and beyond the scope of its asset purchase programme.
It also repeated that its 80 billion euro ($88 billion) per month asset-buying programme -- which Draghi deemed "quite successful" -- would run until March 2017, or beyond if necessary, until it sees an upward adjustment of inflation toward its target.
Overall, the ECB is buying 1.74 trillion euros ($1.91 trillion) worth of assets to cut borrowing costs, induce spending, lift growth and ultimately raise inflation, which has been stuck either side of zero for the past two years.
But such generosity in monetary policy is bumping up against limits. Draghi has consistently called on euro zone governments to loosen their spending to help out, tweaking his standard statement to argue that government reforms need to be "substantially stepped up".
One of imminent issues to handle is the risk that the ECB is running out of qualified assets to buy, particularly German government debt, as yields have fallen below its deposit rate, a self-imposed limit for its buys.
Draghi declined to address the issue, disappointing some expectations, but said that technicalities would not stand in the way of the asset buys and the ECB would review the programme if necessary.
BREXIT AND ITALY
Brexit has been seen as a threat to the euro zone's modest investment and consumption-led recovery. But on Thursday, Draghi appeared calm about it.
"Our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience, he said.
"The announced readiness of central banks to provide liquidity if needed, and our accommodative monetary policy measures, as well as our robust regulatory and supervisory framework, have all helped to keep market stress contained."
The threat remains, however. Early post-Brexit data, such as Germany's ZEW sentiment indicator and euro zone consumer confidence figures, suggest a significant drop in confidence.
But while analysts polled by Reuters cut their 2017 euro zone growth forecasts to 1.3 percent from 1.6 percent, they left their inflation projection unchanged at 1.3 percent, a mixed reading for the ECB, which targets inflation at just below 2 percent.
Italian banks, weighed down by about a 360 billion euros ($400 billion) in bad debt and falling share prices, are also a headache for the ECB, which is the euro zone's bank supervisor.