The European Central Bank held its benchmark interest rate steady this morning, pausing its monetary easing program after one rate cut. President Lagarde indicated that inflation remains elevated and because of this it is now waiting on more data before deciding on what to do next. With the Bank of Canada and the Fed Open Market Committee meeting in the coming week’s this news has reminded investors that the odd rate cut or hike here and there does not necessarily mark the start of a new trend in monetary policy.
After taking a big 2.75% loss yesterday, NASDAQ futures are up 0.5% this morning with bargain hunters apparently stepping in. It remains to be seen if yesterday’s plunge was a correction in a bull market or a big crack that could mark the start of a more significant retreat. Dow Futures have also reversed course with this morning’s 0.2% dip wiping out part of yesterday’s 0.6% gain.
Today’s US economic news is mixed. Weekly jobless claims continue to rise (243K vs previous 223K) suggesting a softening economy. The Philadelphia Fed Manufacturing Survey, however, beat expectations handily (13.9 vs street 2.9).
Gold continues to climb with a gain of 0.4%, while US Crude Oil is consolidating yesterday’s rally. Copper is getting crushed again in the wake of weak China data, down 2.1%.
Adding to yesterday’s 2.9% loss, homebuilder DR Horton is down 1.3% in premarket trading despite beating the street on earnings, indicating that investors are continuing to view earnings season as an opportunity for profit-taking. Netflix* reports after the close today, followed by American Express*, Travelers, and big drillers tomorrow morning.
*Shares of Netflix and American Express are held in portfolios managed by SIA Wealth Management.