Stock rally pauses: Dow down after 9 days of gains
The Dow, which was riding its longest daily winning streak in more than three years, fell Thursday on mixed U.S. earnings reports and the European Central Bank's expected decision to hold off on additional stimulus following last month's 'Brexit' vote.
Ending a nine-day win streak -- its longest run without a down day since March 2013 -- the Dow Jones industrial average slid 78 points, or 0.4%. The blue chip stock gauge had rallied nearly 700 points during the streak.
The benchmark Standard & Poor's 500 stock index fell 0.4% and the Nasdaq composite lost 0.3%. The S&P 500 on Wednesday hit a new high of 2173.02.
The Dow, which notched its seventh straight record high Wednesday, was dragged down Thursday by component Intel (INTC), whose shares fell 4% after the company's revenue fell short of estimates in its quarterly results released Wednesday night. Shares of American Express (AXP), another Dow component, fell 1.6% after a similar revenue miss.
The ECB meeting was its first since Britain voted to exit the European Union on June 23. Its decision to stand pat was not a surprise as Wall Street expected the central bank to hold off on fresh stimulus measures until they get more data and can better measure the economic fallout from 'Brexit'.
No change to ECB policy after Brexit vote
In a statement, the ECB said it left all key rates at current levels, including the main deposit rate, which remains at -0.4% to induce banks to lend rather than horde cash. In addition, the ECB also said it would continue to purchase 80 billion euros worth of assets -- mostly government bonds -- each month through March 27 or beyond in an effort to lower borrowing costs and stimulate the eurozone economy.
ECB President Mario Draghi said in a news conference in Frankfurt that the eurozone had shown "encouraging resilience" in the face of Brexit — a British EU exit — but that “over coming months with new information including staff projections, we will be better able to reassess macroeconomic conditions.”
Back at home, investors are also keeping a close eye on second-quarter earnings season and presidential politics, with GOP presidential nominee Donald Trump set to deliver a key speech tonight on the final night of the Republican National Convention.
Southwest Airlines (LUV) fell short of earnings per share and revenue estimates, as shares plunged 11.2%. Homebuilder Pulte Group (PHM) topped expectations, lifting shares more than 5.3%. On the bullish side, automaker General Motors (GM) topped profit forecasts by 34 cents a share, pushing shares up 1.7%.
GM posts strong second quarter, jolting stock
Overall, heading into Thursday profits for the S&P 500 in the April thru June quarter are estimated to contract 3.8%, putting earnings on track for a fourth straight quarter of negative growth, according to earnings-tracker Thomson Reuters. Of the 70 S&P 500 companies that have already reported results, 67% have topped expectations, which is better than the average beat rate of 63%.
The big run up in stocks in recent weeks has pushed up stock prices to levels that have some Wall Street pros worried about overvaluation.
The nearly 9% surge for the large-company Standard & Poor's 500 index since the late-June post-'Brexit' low has pushed its price-to-earnings ratio — a common valuation metric — to 17.2. The market's current valuation is well above the 15 times earnings it was trading at in February at the 2016 lows and pricier than the average P-E of 14.7 going back almost 50 years, data from Thomson Reuters show.
Contributing: Kim Hjelmgaard