Thursday’s Mid-Day Movers: 3 Stories Driving Markets
After tepid early-morning optimism, the U.S. equity markets slid solidly into negative territory in afternoon trading. Earnings failed to inspire much confidence in investors, who were busy digesting the news out of the central bank meeting in Europe.
At 1:55 p.m.: DJIA: -0.45%, S&P 500: -0.49%, NASDAQ: -0.48%.
1) The European Central Bank has decided to keep the main interest rate at 0.75 percent, in line with most expectations. Speaking after an ECB meeting in Germany, Mario Draghi tried to strike a tone about the region’s economic recovery that was optimistic, but not overly encouraging. Fundamental indicators suggest that the rate of economic decline is slowing down, and in some cases has started to turn around a corner, but the path ahead is still long and treacherous.
Taking the spotlight recently is speculation that an international currency war is brewing, with the dollar, the yen, and the euro likely to play major roles. Central banks have been keen on weakening their currency in order to spur domestic growth, but the impact on international trade is largely negative… (Read more.)
2) Initial unemployment claims fell 1.3 percent week-over-week, adding at least a dash of good news to today’s malaise. After a surge at the end of 2012, initial claims for unemployment insurance have simmered down again, and the four-week moving average continues to fall toward more attractive levels at 350,000 and below.
However, alongside the labor market news comes the BLS Productivity and Costs report, which shows that fourth-quarter non-farm labor productivity declined at an annual rate of 2.0 percent…. (Read more.)
3) Standard & Poor’s is preparing to do battle with the U.S. Justice Department, as the ratings agency brings on John Keher, a lawyer who has represented clients such as Lance Armstrong and Enron’s Andrew Fastow. The DoJ has accused S&P of improperly using its status as an objective ratings agency to misrepresent the quality of mortgage bonds. The DoJ is seeking at least $5 billion in damages, but it seems like the real trophy would be an admission of fallibility from the ratings agency… (Read more.)