Updated at 4:30 pm EST
U.S. stocks ended higher Thursday, recovering from a mid-morning stumble linked to news that President Joe Biden, who is fully-vaccinated and twice-boosted, has tested positive for Covid.
The White House said the President, who is 79 years old, is experiencing “very mild” symptoms of the disease and is taking the Pfizer-made (PFE) – Get Pfizer Inc. Report antiviral Paxolovid. He’ll continue with his Presidential duties, the White House said, with Biden telling his Twitter followers: “Folks, I’m doing great!”.
The slide that followed the first Biden headlines initially extended earlier declines. The dollar bumped higher and oil prices extended their recent run of declines, as investors re-set risk bets following a key European Central Bank rate decision and broader concerns for the health of the global economy.
The ECB lifted its key refinancing rate for the first time in eleven years today in Frankfurt, while unveiling details of a package that would support indebted member states from undue pressure in the bond market.
The ECB increased its benchmark refinancing rate by 50 basis points, to 0.5%, while taking its deposit facility – which have been set in negative territory since 2014 — to 0% and its marginal lending rate to 0.75%. It also rolled-out plans to defend bond prices for indebted member states which it dubbed TPI.
Expectations of a hike of as much as 50 basis points have given the euro some support against the dollar this week, following its slump into parity against the U.S. dollar for the first time in two decades last month, but those bets had faded heading into today’s meeting.
Still, the euro was marked 0.35% higher at 1.0185 and the U.S. dollar index rose 0.15% to 106.937 following the ECB rate decision at 8:15 am Eastern time.
An earlier rate decision from the Bank of Japan was also broadly dollar positive, as Governor Haruhiko Kuroda lifted near-term inflation forecasts but maintained a key lending rate at -0.1% and pledged to hold long-term bond yields at 0% in order to support growth.
Two geo-political developments in Europe kept a lid on risk appetite, as well, as Italy’s Prime Minister Mario Draghi, a former ECB President, resigned amid a collapse of his fragile coalition government and Russia President Vladimir Putin repeated his warning that gas from the newly re-opened Nord Stream 1 pipeline could slow, or even stop, due to crumbling infrastructure.
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Europe’s Stoxx 600 was marked 0.24% higher by the close of trading in Frankfurt after the ECB rate decision, following on from a modest 0.08% decline for Asia’s region-wide MSCI ex-Japan index.
In the U.S., the Treasury bond yield curve remains deeply inverted, with 2-year notes falling to 3.154% and 10-year notes retreating 10 basis points to 2.928%, following a bigger-than-expected jump in weekly jobless claims, which rose 7,000 to a seasonally-adjusted 251,000 for the period ending July 16, the highest in eight months.
Oil prices extended declines following a bigger-than-expected build-up in gasoline supplies reported yesterday by the Energy Department.
WTI futures for September delivery, which are tightly linked to U.S. gas prices, were marked $2.94 lower at $97.00 per barrel, while AAA data noted pump prices fell for a 33rd consecutive day to $4.44 per gallon.
On Wall Street, the S&P 500 ended up 1%, while the Dow Jones Industrial Average gained 0.5%.
The tech-focused Nasdaq gained 161 points, thanks in part to a 9.8% gain for Tesla (TSLA) – Get Tesla Inc. Report after the carmaker topped Wall Street’s second-quarter earnings forecasts and reiterated its goal for full-year delivery growth despite input price pressures and narrowing margins.
United Airlines (UAL) – Get United Airlines Holdings Inc. Report shares slumped 10% after the carrier posted softer-than-expected second quarter earnings as surging staff and fuel costs offset a boom in post-pandemic travel demand.
American Airlines (AAL) – Get American Airlines Group Inc. Report was also on the move, falling 7.5% after modestly weaker-than-expected second quarter earnings and muted capacity plans as the industry grapples with surging fuel costs and staff shortages.
AT&T (T) – Get AT&T Inc. Report fell 7.6% after it posted stronger-than-expected second-quarter earnings but lowered its full-year cash flow forecasts as it ramps-up investment in its expanding 5G network, potentially putting its dividend payout levels at risk.