Market Recap: Stocks Tumbled as Draghi Dashed Hopes for Broad ECB Intervention
Markets closed down on Wall Street today: Dow -1.63%, S&P -2.11%, Nasdaq -1.99%, Oil -2.48%, Gold -1.86%.
On the commodities front, Oil (NYSE:USO) fell to $98.00 a barrel. Precious metals were also down, with Gold (NYSE:GLD) falling to $1,712.40 an ounce while Silver (NYSE:SLV) fell 2.93% to settle at $31.67.
Today’s markets were down because:
1) ECB. Though ensuring European banks would have unlimited access to cheap cash with new three-year loans, European Central Bank President Mario Draghi frightened investors when he refused to commit to broad assistance to troubled euro countries. The news should have come as no surprise, given that Draghi has continually emphasized the importance of sovereign governments taking their steps to restore confidence and tackle the debt crisis, but many were still hoping the ECB would expand its bond-purchasing program.
2) Jobless. The number of people filing for initial unemployment benefits fell to a 9-month low of 381,000 last week. The news initially boosted markets, but as has been the case for months now, Europe’s news soon overshadowed positive economic data in the U.S., where wholesale inventories for the month of October also did better than expected, according to a report today, coming in at 1.6 percent instead of the projected 0.2 percent increase.
3) Banks. Financials were unsurprisingly the hardest hit by the ECB’s news, with all major U.S. banks declining. Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), and JPMorgan (NYSE:JPM) were all down 3 to 5 percent today, while Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) did even worse, closing the day down 6.97 percent and 8.42 percent, respectively.