By Mark DeCambre and Victor Reklaitis, MarketWatch
Lululemon leaps 18% after earnings report
U.S. stocks on Thursday touched fresh record levels in intraday
trading after the European Central Bank held its key rates steady
but said it would taper its asset-purchase plan in April, while
leaving the door open for an extension of its economic stimulus
program "if necessary."
However, Wall Street struggled to hold on to higher levels,
offering signs that the market may be reassessing its climb to new
heights for stocks in the wake of Donald Trump's election win a
month ago.
The Nasdaq Composite Index hit an all-time intraday trading high
of 5,407.02, joining the other trading benchmarks which notched
trading records Wednesday. The tech-laden index hit its first
record since Nov. 29 and was most recently bouncing around, up 12
points, or 0.2% at 5,406 most recently.
The Dow Jones Industrial Average gave up 13 points, or less than
0.1%, at 19,540, but briefly set an all-time trading high of
19,592.95, led by sharp gains in banks including J.P. Morgan Chase
& Co. (JPM) and Goldman Sachs Group(GS).
The S&P 500 index also set an intraday record of 2,244.06,
but was retreating, with nine of the S&P 500's 11 sectors
trading in negative territory. Utilities and real estate were the
worst performers, while materials and tech were among the best.
The early tone was set by the ECB meeting.
"I think the biggest headline in the market is the ECB because
it looks like they are taking their foot off the accelerator," said
Jack Ablin, chief investment officer, at BMO Private Bank, He said
partially influencing Wednesday's strong rally was hope that the
ECB would continue its stimulus program at full tilt. Signs that it
may be scaling back now can be viewed as a negative for U.S.
markets because the ECB has been a big purchaser of U.S. assets, he
said.
"I argue that the ECB has more influence over the S&P 500
than the [Federal Reserve]," Ablin said.
The ECB said it would in April cut its asset-purchase program to
buying EUR60 billion ($64 billion) in bonds each month from EUR80
billion until the end of December 2017, "or beyond, if necessary,
and in any case until the Governing Council sees a sustained
adjustment in the path of inflation consistent with its inflation
aim." The ECB's targets inflation of near 2%.
Over the longer-term, the ECB's moves may be viewed as bullish
to some because it implies healthier economies in Europe, which are
big trading partners with U.S. companies.
"At this point in the cycle tapering is viewed as a good thing
because it is seen as a sign of improvement," said Colin
Cieszynski, chief market strategist at CMC Markets told
MarketWatch. He said that volatility is likely as investors digest
the news.
One area of volatility for the market was in currencies.
The euro dropped precipitously against the dollar after an early
pop higher as the bounce from the ECB decision faded. The euro rose
0.7% to $1.0874, its highest level since Nov. 14. But it soon
turned lower
(http://www.marketwatch.com/story/dollar-buying-takes-a-breather-as-investors-look-ahead-to-central-bank-meetings-2016-12-08),
falling more than 1% to a three-day low of $1.0663.
On Wednesday, the Dow and S&P 500 closed higher by 1.6% and
1.3%, respectively, as each gauge scored a record close
(http://www.marketwatch.com/story/dow-industrials-aim-for-fresh-all-time-high-2016-12-07).
The Nasdaq Composite climbed 1.1%, finishing 0.1% shy of its
all-time closing high, achieved in late November.
Individual movers: Shares in Lululemon Athletica Inc.(LULU)
soared 18%. The Canadian seller of athletic apparel late Wednesday
posted better-than-expected earnings
(http://www.marketwatch.com/story/lululemon-jumps-on-strong-earnings-new-buyback-plan-2016-12-07)
and announced a new buyback plan.
Costco Wholesale Corp.(COST) declined 2.7% after the warehouse
club chain reported stronger-than-anticipated earnings
(http://www.marketwatch.com/story/costco-same-store-sales-rise-following-declines-2016-12-07)
late Wednesday.
Home builder Hovnanian Enterprises Inc.(HOV) fell 4.1% after
disappointing quarterly results from the home builder
Economic news: A report on U.S. weekly on employment showed that
jobless claims dropped by 10,000 to 258,000, matching forecasts and
extending a streak of claims below 300,000. The report continues a
trend that points to a healthy labor market.
See:Italy put a cloud over Europe, but there is a silver lining
for the ECB
(http://www.marketwatch.com/story/how-italys-no-vote-might-be-the-ecbs-silver-lining-2016-12-05)
The Federal Reserve entered the so-called blackout period
Tuesday ahead of its meeting Dec. 13-14, so there are no Fed
speakers on the docket.
Check out:
Other markets:Oil futures
(http://www.marketwatch.com/story/oil-prices-stabilize-as-investors-watch-for-china-data-2016-12-08)
traded higher, erasing some of this week's decline. European stocks
(http://www.marketwatch.com/story/european-stocks-edge-higher-as-ecb-decision-looms-2016-12-08)
have been trading higher, while Asian markets closed mostly higher
(http://www.marketwatch.com/story/asian-markets-catch-a-ride-on-wall-streets-record-wave-2016-12-07).
Gold futures were dropping, and a key dollar index was ticking
higher.
(END) Dow Jones Newswires
December 08, 2016 10:34 ET (15:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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