by FP Staff Jun 6, 2013 23:45 IST
NEW YORK (Reuters) - U.S. stock were flat on Thursday, failing to hold onto a rebound off a steep two-day decline after European Central Bank President Mario Draghi ruled out more aggressive actions to stimulate the region's economy.
Investors were also looking ahead to Friday's payroll report, which will not only give insight into the strength of the economic recovery, but could also provide a clue into how long the Federal Reserve will keep its stimulus policy intact.
Futures had indicated that Wall Street would recover from recent weakness, but those gains evaporated after Draghi said ECB policy would remain accommodative for as long as needed, though the Governing Council ruled out lowering the bank's deposit rate into negative territory.
"While stocks are flat, any bias will be to the downside given all the nervousness ahead of the report tomorrow, a big piece of data at a time when the Fed is very data-driven," said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.
"There's also some disappointment over that the ECB wasn't more aggressive, especially since Europe is still in recession and they have more leeway with monetary policy."
The Dow Jones industrial average was up 2.65 points, or 0.02 percent, at 14,963.24. The Standard & Poor's 500 Index was down 0.14 points, or 0.01 percent, at 1,608.76. The Nasdaq Composite Index was up 2.47 points, or 0.07 percent, at 3,403.95.
The S&P 500 dropped 1.9 percent over the past two sessions amid concerns the U.S. Federal Reserve may scale back its bond-buying stimulus before the economy is strong enough to stand on its own. The two-day drop was the worst back-to-back performance since a 2.1 percent decline in mid-April.
Weekly initial claims fell by 11,000 to 346,000, slightly higher than had been expected. The data was the last read on the labor market ahead of Friday's payroll report, which is expected to show 170,000 jobs added in May, a modestly higher rate than April.
The report will be especially closely watched as investors scour it for any clue into when the Fed may begin slowing its bond buying program, which has been credited with fueling equity gains this year.
"A weaker report could lead to a better day in stocks tomorrow because of the inference that tapering may be delayed," said Grohowski, who helps oversee $188 billion in client assets. "A stronger number could signal that tapering is coming soon, which could make the market nervous."
The S&P 500 is up about 13 percent so far this year, repeatedly running to record highs. Those gains were partly fueled by the belief that the Fed's stimulus would remain in place.
Retail stocks were in focus as the group reported monthly sales that were largely in line with expectations. Costco Wholesale Corp (COST.O) rose 1.1 percent to $110.43 while L Brands Inc (LTD.N) slumped 2.2 percent to $50.50. Home Depot Inc (HD.N) was one of the top gainers on the Dow, up 2.1 percent to $76.67.
The S&P retail index rose 0.5 percent.
The Nasdaq moved higher, boosted by gains in networking stocks such as Ciena Corp (CIEN.O), which jumped 14 percent to $18.60. The company reported a surprise second-quarter profit on an adjusted basis and forecast stronger-than-expected revenue for the current quarter.
JDS Uniphase (JDSU.O) surged 6.2 percent to $13.95 as the S&P 500's top gainer while Cisco Systems Inc (CSCO.O) rose 0.9 percent to $24.55. The NYSE Arca network index advanced 2.8 percent.
(Editing by Nick Zieminski)
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