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Wall Street anticipates action from ECB

Mario Draghi, President of the European Central Bank
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Mario Draghi, President of the European Central Bank

Wall Street is looking to the European Central Bank's much-anticipated policy decision on Thursday, with the ECB viewed as likely to cut the 18-nation bloc's economic outlook and further its monetary easing.

"Perhaps the most watched and potentially market-moving event this week is in Europe, as the ECB is scheduled to meet. The ECB is widely expected to at least cut their three policy rates, and more policy options are considered likely. The exact form of these actions is unknown, but asset purchases seem unlikely. If the ECB cuts its deposit rate, it will be the first major central bank to charge banks for depositing money with them," noted Bill Stone, chief investment strategist, at PNC Financial Services Group.

"We need them to do something, that's an imperative. Signaling they will keep rates low for an extended period, that should start every sentence," said Art Hogan, chief market strategist at Wunderlich Securities.

Read MoreCould this be Draghi's silver bullet?

The ECB's Governing Council gathering in Frankfurt, Germany, follows data from Europe on Wednesday that had Euro-area economic growth losing steam in the first quarter and services expanding in May.

With the ECB widely expected to cut key lending rates, "the most compelling argument for the central bank and many investors stems from the persistence of low inflation and the threat of deflation," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

Read MoreJim O'Neill: Expect ECB's Mario Draghi to deliver

The soft economic reports weighed on European equities and weakened the euro, while highlighting the difficulties confronting ECB President Mario Draghi as he attempts to reignite Europe's economy and avert disinflation.

"What the euro zone really needs is a weaker euro, exporters desperately need a weaker euro so they can increase exports. Now they have to walk the walk, less talk and more do," said Wunderlich's Hogan.

On Wednesday, U.S. stocks rose, lifting the S&P 500 into uncharted territory, after a measure of the U.S. services sector climbed more than expected in May, helping counter another report that had private-sector job creation failing to live up to expectations.

Read MoreS&P 500 furthers record climb ahead of ECB decision

—By CNBC's Kate Gibson.

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

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