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T3's Take 3: ECB President Mario Draghi Is Still Willing to Do Whatever It Takes


Today's financial recap and tomorrow's financial outlook.

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Whatever It Takes, Part II

This morning, the European Central Bank announced that it would leave all three of its main interest rates unchanged, which was universally expected by economists.

However, at the subsequent press conference, ECB President Mario Draghi took a very dovish turn which took markets off-guard. 

Draghi said the ECB's quantitative easing program could continue beyond September 2016 if needed due to downside risks in the economy, and that the bank is open to a whole menu of policy instruments.

He also said that the ECB discussed a deposit rate cut. The ECB is concerned about downside risks to inflation and growth because of weak oil prices and the slowdown in China.

Draghi's dovishness sent the euro sharply lower against the US dollar, and pushed European bond yields lower.

European equities also got a boost, with the German DAX rising 2.3%.

US Follow-Through

Draghi's speech boosted S&P 500 futures pre-market and drove strength in early trading.

The S&P 500 finished up 1.7% at 2052.54, while the NASDAQ rose 1.7% as well.

The NASDAQ Biotechnology Index (IBB) ETF was weak in early trading but rebounded off the low

Valeant Pharmaceuticals (VRX), which fell sharply on Wednesday after Citron Research called the company a fraud, had another rough session with a 7.4% drop.

Cybersecurity stocks had a strong day due to strong results and guidance from Proofpoint (PFPT), which boosted industry leaders like FireEye (FEYE) and Palo Alto Networks (PANW).

Crude oil rose $0.18 to $45.38 today.

In economic news, the Chicago Fed and FHFA House Price Index missed expectations, while jobless claims and existing home sales surpassed consensus forecasts.

Earnings News

Friday was another big earnings day.

Industrial giant Caterpillar (CAT) reported EPS of $0.75, missing by 4 cents. The company also missed revenue estimates. However, the stock rallied 0.X% due to very low expectations after several straight weak quarters.

McDonald's (MCD), which is also coming off several straight disappointing reports, reported large revenue and earnings beats, and the stock rose 8.1%.

3M (MMM) reported a modest earnings beat and in-line revenues, and the stock rose 4.1%.

American Express (AXP) led the major earnings decliners today, falling 5.2% after missing expectations Thursday after the close.

Friday's Financial Outlook

Tomorrow morning, the Markit US Manufacturing PMI willl be reported, followed by the Baker Hughes Rig Count at 1:00 p.m. ET. 

In international economics, European Markit PMI's and Canadian CPI will be reported.

American Airlines (AAL), LM Ericsson (ERIC), LyondellBasell (LYB), Procter & Gamble (PG), Shire (SHPG), VF Corp (VFC), and Whirlpool (WHR) report earnings before open.
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