Stock Market Forecast – Shares Drop as the Dollar Rallies on Dovish ECB Action

Stock prices were under pressure for most of the trading session. This came as the dollar surged following a very dovish ECB meeting. The dollar surged against most major currencies rising to the highest level since May of 2017. A stronger dollar weighs on US products making them more expensive around the globe. This could weigh on multinational companies. Jobless claims came out slightly lower and there was a larger drop than expected.

Traders now await Friday’s unemployment report from he BLS. Expectations are for a rise of approximately 190K jobs created in February. This comes following January’s huge 300K increase in Non-farm payrolls. Most sectors were lower. The biggest detractors were financials and materials, Real-estate and utilities bucked the trend. Transports continued to decline dropping for the 10th consecutive trading session. Over the last 10-trading session the only sectors that is in the black is utilities. The worst performer has been healthcare followed by materials.

Jobless Claims Slide

Jobless claims slipped 3K to 223K for the week ended March 2, according to the Labor Department. Expectations had forecast claims would be unchanged at 225Kin the latest week. The four-week moving average of initial claims, fell 3K to 226,250 last week, the lowest level in a month. Trader’s await the employment report which is scheduled for Friday. Nonfarm payrolls likely increased by 180K jobs in February after surging by 304K in January.

The ECB Reverse Course

The European Central Bank had a significant policy reversal Thursday, unveiling plans for fresh stimulus just three months after phasing out 2.9 trillion dollars bond-buying program. This is the first of the major central banks to point to a significant slowdown and change policy to support the deceleration.

The ECB kept rates unchanged and announced plans for cheap long-term loans for banks, which is known as the TLTRO. The first loans will be launched in September. Despite the new stimulus, ECB President Mario Draghi said that the risks to the economy remain but they do not see a recession on the horizon. The staff projections of the ECB revised both growth and inflation lower. Growth was lower for the Q1 to 1.1% from 1.7%. Inflation in the first quarter was lower to 1.2% from 1.6%.

Facebook Announces Plans to Shift away from Broadcasting

Facebook CEO Mark Zuckerberg announced plans to shift Facebook’s direction away from broadcasting one’s thoughts to the world and toward private messages and encryption. The issue is that with this shift nobody will know how it will affect revenues and earnings. Facebook shares took it on the chin declining more than 2% intraday. Facebook also announced that it would take steps to combat vaccine misinformation.