Stocks fell on Thursday after the European Central Bank slashed its economic growth forecast for 2019 and announced a new round of stimulus to help banks in the region, stoking worries over the global economy.
The Dow Jones Industrial Average closed 200.23 points lower at 25,473.23 as shares of Caterpillar and Walgreens Boots Alliance lagged. The S&P 500 fell 0.8 percent to 2,748.93, led by declines in the financials and consumer discretionary sectors. The Nasdaq Composite dropped 1.1 percent to 7,421.46. The indexes posted their fourth consecutive loss.
Bank of America, Goldman Sachs, Morgan Stanley and Citigroup all fell around 1 percent. The SPDR S&P Bank ETF (KBE) dropped 1.6 percent.
ECB President Mario Draghi said the central bank cut its growth estimate to 1.1 percent, down from a 1.7 percent expansion forecast released in December.
The ECB also said its new targeted longer-term refinancing operations (TLTRO-III) stimulus program will start in September and run through March 2021. TLTROs are loans provided by the ECB to European banks at a low rate, making it easier for them to lend money to consumers, which in turn can help stimulate the economy. This is the third stimulus injection from the ECB since 2014.
"They're basically admitting the economy is quite soft," said Peter Cardillo, chief market economist at Spartan Capital Securities. "This adds to one thing: uncertainty."
The ECB's announcements come amid lingering concerns over a possible economic slowdown across the globe. The Bank of Canada said Wednesday there was "increased uncertainty" around future rate hikes, while Australia's fourth-quarter GDP expanded at a pace of just 0.2 percent. In the U.S., meanwhile, the Federal Reserve has already signaled it will be "patient" in raising rates.