Wall Street drifts back from record highs on dire global growth outlook

U.S. stocks ended lower on Thursday, drifting back away from the record prints in the Nasdaq and S&P 500, weighed down by prospects of a less dovish Federal Reserve, a bearish ECB outlook for the eurozone economy that will require a stmulus package and a series of mostly disappointing earnings reports.

The Dow Jones Industrial Average, DJIA, ended 128.99 points lower, or off by 0.5%  at 27,140.98, representing its worst day since June 25. The S&P 500 index dropped 15.89 points, or 0.5%, to 3,003.67 and the Nasdaq Composite Index dropped 82.96 points, or 1%, to end at 8,238.54 which was the steepest daily slide for the index since June 25.

US data

There was a rise in both durable goods and core orders. "Core orders have been positive in five of the past six months, indicating that business investment in the US is picking up," analysts at ANZ bank explained. 

ECB outcome

The analysts at ANZ Bank noted that the ECB statement was very dovish, as expected, laying out a very accommodative framework for monetary policy; albeit Draghi said the risk of recession is “pretty low”:

Forward guidance is that rates will remain at current levels or lower at least through the first half of 2020. To open up room for lower interest rates, the ECB is examining options for tiering the deposit rate in order to minimise the impact on bank profitability, and it is also looking at possible additional QE. Euro area surveyed manufacturing data has been terrible recently. Both the inflation and growth outlooks are deteriorating and we expect the ECB to deliver a comprehensive, broad package of unconventional easing in September.

DJIA levels

The DJIA index is edging lower with a series of lower lows and has fallen below with 26905 on the radar on a break below the 20-day moving average. Below there, the 23.6% retracement of the 3rd June low to 12th July recently printed high falls in at 26706 which meets April 23rd and 1st May double-top highs.