By Saumya Vaishampayan
U.S. stocks pared early losses as new reports suggested the
European Central Bank was set to deliver an easing package Thursday
that matched investors' expectations.
A proposal from the European Central Bank's executive board
calls for bond purchases of about EUR50 billion ($58 billion) per
month that would last for a minimum of one year, The Wall Street
Journal reported. The proposal suggests bond purchases could amount
to at least EUR600 billion, in line with forecasts that have
recently homed in on a figure of around EUR500 billion or
higher.
The ECB news helped stocks erase early losses posted in the wake
of soft earnings news from International Business Machines
Corp.
The Dow Jones Industrial Average fell 32 points, or 0.2%, to
17481. The S&P 500 added two points, or 0.1%, to 2024, and the
Nasdaq Composite Index rose two points to 4656.
IBM reported further declines in quarterly profit and revenue,
and issued a profit forecast that fell below Wall Street's
expectations. Shares fell 3.4%.
Going into the fourth-quarter earnings season, analysts surveyed
by FactSet had expected earnings growth of 1.1%, the weakest since
the third quarter of 2012. U.S. companies faced dollar strength, a
sharp downdraft in oil prices and weak economic growth abroad
during the quarter. Early indications aren't looking too rosy;
factoring in 51 companies that have already reported, the S&P
500 is on track to post earnings growth of just 0.36% from a year
ago.
"Oil is probably the biggest story," said Bill Stone, chief
investment strategist at PNC Wealth Management. "I know that energy
earnings are going to be bad. The other side is, do any of the good
[effects] of lower oil start showing up?" Mr. Stone noted that
Delta Air Lines Inc.'s better-than-expected fourth-quarter results
were helped in part by savings on jet fuel.
Stocks ended higher Tuesday, with the Dow industrials adding
less than 0.1% to 17515.23. The S&P 500 rose 0.2% to
2022.55.
German Chancellor Angela Merkel said Wednesday the ECB hasn't
made any decision yet, and warned that such a move must not result
in minimizing countries' reform efforts. Also attracting attention
were comments from Ewald Nowotny, a member of the ECB's governing
council. Mr. Nowotny said Wednesday policy makers and central
bankers should not get overexcited about Thursday's meeting.
The Stoxx Europe 600 was nearly flat in recent trade.
In economic news, housing starts climbed 4.4% in December from a
month earlier to an annual rate of 1.089 million, the Commerce
Department said Wednesday. Building permits, an early indicator of
construction activity, fell 1.9% to an annual rate of 1.032
million. Economists surveyed by The Wall Street Journal had
expected overall housing starts to reach a pace of 1.04 million
last month and building permits to hit a rate of 1.06 million. The
housing-starts report tends to be volatile and is often
revised.
Oil prices rebounded, with crude-oil futures adding 2.5% to
$47.66 a barrel. Gold futures fell 0.2% to $1292.30 an ounce.
The yield on the 10-year Treasury note fell to 1.793% from
1.806% on Tuesday. Yields fall as prices rise.
Among individual stocks, Netflix shares surged 17%. The company
said it added 4.3 million streaming customers as foreign markets
grew faster than expected, beating its forecast of 4 million.
UnitedHealth Group Inc. said earnings rose 5.8% in its December
quarter, beating expectations. Shares gained 2.2%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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