Stocks remained pressured by midday Thursday, even after the European Central Bank announced additional stimulus measures. Risk-on sentiment could still be detected in the market.
All three major U.S. indices fell, with the S&P 500 down 0.52%. The 10-Year Treasury yield rose to 0.81%, the highest it has been since March 26.
This is after the ECB announced it is upping its bond buying program to $1.5 trillion for an EU economy struggling to receive the benefit of a $2 trillion fiscal spending plan.
"It could have been a buy the rumor sell the news type of trade,” Lindsey Bell, chief investment strategist at Ally Invest told TheStreet. "People were expecting the ECB to take this move. There’s been a pretty good run up, but a lot of good news has ben priced into the EU markets.”
The Stoxx 600, down 0.72% Thursday, is up 12% since May 13. Bell said investors are taking a breather, sentiment that is echoed by others on Wall Street. And the S&P 500 is up 10% since that date, heading into stretched valuation territory.
Still, investors were favoring value over growth, as they’ve seen evidence of late supporting a sharp economic recovery. The Vanguard S&P 500 Value ETF (VOOV) - Get Report fell just 0.12%, with its growth counterpart (VOOG) - Get Report down 0.72%. Bank stocks rose because the yield curve continues to expand, a considerable tailwind for bank profits.
Some EU-exposed stocks were rising as the stimulus was announced, but others were not. Booking Holdings (BKNG) - Get Report, which derives 79% of its revenue from Europe, rose as much as 0.5% before falling to a flat move on the day. Honeywell (HON) - Get Report, which sees about a quarter of revenue from Europe, fell 0.3%.
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