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The markets cut down on heavy losses in afternoon action as traders assessed news from Europe and weaker-than-expected U.S. data.
As of 2:00 p.m. ET, the Dow Jones Industrial Average fell 43.1 points, or 0.31%, to 13941, the S&P 500 dipped 4 points, or 0.26%, to 1508 and the Nasdaq Composite declined 11.3 points, or 0.36%, to 3157.
The losses on the day represented a traditional flight to safety. The consumer staple and utility sectors were the only gainers, while consumer discretionary stocks struggled the most. Traders also bid up safe have U.S. Treasury bonds, sending the yield on the 10-year down to 1.947% from 1.963%.
Focus on Europe as Euro Sinks
The euro took a 1% hit against the U.S. dollar, which put pressure on equities and dollar-traded commodities. The fall came as traders paid close attention to the European Central Bank. The ECB kept its main refinancing rate at 0.75% and President Mario Draghi also hinted that the exchange rate of the euro, which has appreciated markedly recently, isn't in the purview of the central bank.
"The ECB had seemingly moved away from a possible interest rate cut at its January meeting as it was encouraged by signs of stabilization, albeit at a low level, in some of the latest Eurozone economic indicators," IHS Global Insight Chief European Economist Howard Archer said.
Meanwhile, the Bank of England held its benchmark rate and scope of its quantitative easing program on hold, as was expected. The BoE also said the U.K. economy is set for a "slow but sustained recovery."
German factory output climbed at a pace of 0.3% in December, besting estimates by 0.1-percentage point, and swinging back from a 0.2% contraction in November. Germany is Europe's biggest economy, and while it has struggled to recover from the debt crisis, it's been a bright spot in the eurozone.
U.S. Labor Data Disappoint, But Still Point to Bright Spots
The U.S. Labor Department said new claims for U.S. unemployment benefits fell to 366,000 last week from an upwardly revised 371,000. Claims were expected to fall to 360,000 from an initially reported 368,000. The Federal Reserve is set to provide its latest look at consumer credit conditions at 3:00 p.m. ET.
Michael Gapen, an analyst at Barclays, said the data "remain consistent with moderate job growth," for the month of February.
On the corporate front, Macy's (M) saw its same-store sales jump 11.7% on a year-to-year basis in January, easing besting estimates of a 6.2% gain. Target's (TGT) results beat expectations too, with same-store sales climbing 3.1% compared to expectations of 1.7%. Gap (GPS) doubled Wall Street's estimate with an 8% increase in same-store sales.
David Einhorn's Greenlight Capital unveiled plans to sue Apple (AAPL) and urged shareholders to vote down an upcoming amendment. He also revealed a 1.3 million-share long position in the iPad-maker. Shares initially jumped, but then made a big pullback.
In commodities, oil prices fell after a volatile trading session Wednesday. The benchmark U.S. contract slid 59 cents, or 0.64%, to $95.96 a barrel. Wholesale New York Harbor gasoline dipped 0.62% to $3.021 a gallon. In metals, gold rose $4.50, or 0.27%, to $1,683 a troy ounce.
The Euro Stoxx 50 rose 0.54% to 2631, the English FTSE 100 fell 0.26% to 6280 and the German DAX edged up by 0.45% to 7615.
In Asia, the Japanese Nikkei 225 slumped 0.93% to 11357 and the Chinese Hang Seng dipped 0.34% to 23177.