US close: Markets drop after Swiss National Bank's shock decision
US stocks retreated on Thursday after the surprise announcement by the Swiss National Bank shocked the markets, leading to turbulence.
Switzerland's central bank called time on a three-year self-imposed cap on the strength of its currency, which sent it vaulting 41% higher, although it finished trading up by a lesser 19%.
The Dow Jones Industrial Average fell 0.61% to 17,320.71 while Nasdaq dropped 1.47% to 4,570.82 and the S&P 500 slid 0.91% to 1,992.67.
CMC Markets analyst Jasper Lawler said: “US markets underperformed their European counterparts on Thursday as the respective monetary policies appear to be diverging in favour of Europe as the ECB moves towards what appears to be almost certain QE, a likely boon for risky-assets.”
IG analyst Alastair McCaig said: “The burden of raising morale has fallen on the shoulders of the US economic data releases, following the corporates' failure to create any optimism. Although the Empire State Manufacturing index kicked higher, the bigger-than-expected US unemployment claims will have dented the overall perception of the US recovery.”
US initial jobless claims came in at 316,000 for the week ended 10 January, after rising by 19,000 from the previous week. The consensus estimate had been for a reading of 291,000.
Lawler noted: “Unemployment rose above 300,000 for the first time since November showing deterioration in the labour market coming off the slowdown in NFP job growth in December from the multi-year highs in November.”
“The US jobs trend in January can for now be put down to seasonal factors as hiring slows post the jump before the holiday period. Should there be a few more weeks of claims above 300,000 that may start to impact the outlook for the US labour market and as such the timing of the first Fed rate hike.”
Oil prices were making gains during the day but were declining again by closing time with WTI down 4.9% to $46.22 a barrel and Brent down 2.1% to $47.68 a barrel.
McCaig continued: “Both WTI and Brent crude have taken advantage of the markets' focus being taken off them by retesting the $50 a barrel level; they have matched each other stride-for-stride in their efforts to distance themselves from the Saudi oil minister’s prophetic $40 call.”
Over on COMEX, gold futures increased 1.98% to $1,258.90 while the dollar fell against the yen but rose against the pound and the euro.
The yield on a benchmark US 10-year Treasury dropped fourteen basis points to 1.72%.
EnteroMedics closed lower by 5% to $1.33 while eHealth plummeted 54.71% to $9.42.