U.S. stock futures pare loss as ECB points to ‘moderately’ slow pace of asset purchases

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MARKET SNAPSHOT

U.S. stock futures pared early declines Thursday morning, as investors parsed an updated policy statement from the European Central Bank that could help to inform the Federal Reserve’s plans to scale back on COVID-era policies.

What’s happening

  • Futures on the Dow Jones Industrial Average traded 2 points, or less than 0.1%, lower to 35,012.
  • Futures on the S&P 500 slipped 3 points, or less than 0.1%, to 4,510.
  • Nasdaq-100 futures traded 5 points, or less than 0.1%, lower at 15,613.

On Wednesday, the Dow Jones Industrial Average declined 69 points, or 0.2%, to 35031.07, the S&P 500 dropped 6 points, or 0.1%, to 4514.07, and the Nasdaq Composite ended lower by 88 points, or 0.6%, to 15286.64.

What’s driving markets

Markets were trading virtually unchanged following an updated policy statement from the ECB.

Europe’s central bank said that it would conduct asset purchases under its pandemic emergency purchase program, or PEPP, at a “moderately lower pace” after accelerating purchases in recent quarters. “Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favorable financing conditions can be maintained with a moderately lower pace of net asset purchases under the PEPP than in the previous two quarters,” the ECB said following a meeting of its Governing Council.

The ECB said PEPP purchases would continue with an envelope of €1.85 trillion through at least the end of March 2022. The ECB left key interest rates unchanged, as expected. ECB President Christine Lagarde will hold a news conference at 2:30 p.m. Frankfurt time, or 8:30 a.m. Eastern.

Meanwhile, New York Fed President John Williams, who gets a vote at every interest-rate-setting meeting, said late Wednesday the central bank is still on track to reduce its bond purchases this year.

“Recently, stocks were in an upside trajectory on falling expectations that the Fed will taper this year, and this was due to the latest disappointing U.S. jobs data,” said Charalambos Pissouros, head of research at JFD Group.

Williams comments, however, suggest to some that there remains a chance that the Fed will announce a tapering plan sooner than later.

Which companies are in focus

  • GameStop was under pressure after-hours as the videogames retailer remained coy on its longer-term plans.
  • Lululemon Athletica by contrast rallied as the athleisure-apparel maker blew past Wall Street estimates for the quarter and increased its full-year forecast

How other assets are trading

  • The 10-year Treasury note was little changed at 1.34%.
  • The dollar was trading 0.2% lower, as measured by the ICE U.S. Dollar Index which stood at around 92.49.
  • Gold futures were on the rise, with the December contract up 0.3% at around $1,800 an ounce.
  • Oil futures rose, with West Texas Intermediate oil for November up 0.6% at $69.48 a barrel.
  • The Hang Seng tumbled 2.3% as China took aim at its videogame makers. The South China Morning Post reported the government will freeze new game approvals.
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