Maryland News Desk

ECB effect: Dow, S&P 500 flat as Nasdaq slips 0.3%

ECB effect: Dow, S&P 500 flat as Nasdaq slips 0.3%

U.S. stocks gave up early gains Thursday as investors digested an array of fresh stimulus measures from the European Central Bank designed to combat weak growth and low inflation but questioned whether the moves would produce the desired results. The Dow Jones industrial average and the S&P 500 ended basically flat — the first down fractionally and the other up a trace — while the Nasdaq slid 0.3%.

At first stocks reacted bullishly to the ECB’s move to cut interest rates further into negative territory and increase its year-old bond-buying program. Those measures went beyond what investors were expecting. But the gains faded after ECB president Mario Draghi said in a press conference that it is unlikely rates will be pushed lower from current levels, a comment that investors interpreted as a sign the ECB was running out of ammunition. Draghi also lowered growth forecasts for Europe, warned that the risk to the forecast is to the downside and noted the pressure rock-bottom rates were having on eurozone banks.

“Draghi made several comments that took the wind out of the market’s sails,” John De Clue, chief investment officer at The Private Client Reserve of U.S. Bank, told USA TODAY. “Draghi said interest rates in Europe will not likely be pushed much lower, (bascially acknowledging) that the ECB has done about all it can in this regard. The ECB is clearly concerned about the health of European banks, and is trying to find ways to make it more profitable for the banks to ramp up lending.”

Wall Street was watching to see if ECB president Mario Draghi would deliver on his recent promises to do what it takes to revive the eurozone economy. The Draghi-led ECB appeared — at least at first — to have given investors what they hoped for. As expected, the ECB pushed interest rates even lower into “negative territory” and said it would spend more euros each month to buy bonds. Both moves are designed to jump-start growth by giving banks more of an incentive to lend money and to get more euros into the system.

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