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U.S. stocks drift lower after ECB rate cut

Xinhua, March 11, 2016 Adjust font size:

U.S. stocks pared early gains to trade lower around midday Thursday, as the European Central Bank (ECB) cut the benchmark interest rate to a record low of zero percent.

By noon, the Dow Jones Industrial Average fell 61.05 points, or 0.36 percent, to 16,939.31. The S&P 500 dipped 5.22 points, or 0.26 percent, to 1,984.04. The Nasdaq Composite Index was down 17.20 points, or 0.37 percent, to 4,657.18.

The Governing Council of the ECB decided to cut the main refinancing operations interest rate for the euro area by 5 basis points to a record low of zero percent on Thursday.

The interest rate on the marginal lending facility will be decreased by 5 basis points to 0.25 percent and the interest rate on the deposit facility will be decreased by 10 basis points to minus 0.40 percent, with effect from March 16, 2016.

The ECB also expanded its asset purchase program from 60 billion euros (66.81 billion U.S. dollars) to 80 billion euros (89.08 billion dollars) per month, beginning in April.

"This comprehensive package will exploit the synergies between the different instruments and has been calibrated to further ease financing conditions, stimulate new credit provision and thereby reinforce the momentum of the euro area's economic recovery and accelerate the return of inflation to levels below, but close to 2 percent," ECB President Mario Draghi said at a press conference following the governing council meeting.

He said that he did not anticipate the need to reduce rates further, but added that new facts could change the situation.

On the U.S. economic front, in the week ending March 5, the advance figure for seasonally adjusted initial jobless claims decreased 18,000 from the previous week's revised level to 259,000, below market consensus of 272,000, said the Labor Department Thursday.

The 4-week moving average was 267,500, a decrease of 2,500 from the previous week's revised average.

On Wednesday, U.S. stocks ended higher after wavering in a tight range, as investor sentiment was buoyed by a solid rebound in oil prices. Endite