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Stocks flat as oil drop offsets ECB stimulus

Early gains on Wall Street faded Thursday as concerns about the global economy bothered investors and a slump in oil prices weighed on the stock market.

The Dow Jones industrial average, up more than 70 points at the start of the session, finished with a loss of 8.70 points to 17,069.58.

The Nasdaq composite index was down 10.28 points to 4,562.29 and the Standard & Poor's 500 index lost 3.07 points to 1,997.65.

Stocks have made a sluggish start to September, historically the worst month for the market, after surging in August.

News the European Central Bank was cutting short-term interest rates and expanding its bond buying program, similar to the quantitative easing program of the U.S. Federal Reserve, raised new questions about the economies in Europe.

Investors will now focus on Friday's report from the Department of Labor detailing U.S. payrolls in August and the nation's unemployment rate. On Thursday, ADP said civilian payrolls rose by 204,000 last month.

Gold closed down $3.80, or 0.3 percent, at $1,266.50 an ounce. Silver slipped 5.1 cents, or 0.3 percent, to $19.14 an ounce. Copper prices rose, climbing to 2.4 cents, or 0.8 percent, to $3.15 per pound.

“The market did respond to the ECB news this morning and certainly to the good economic news, but there are definite signs that this market is stretched a bit,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

Stocks had climbed in early trading, following a move higher by major indexes in Europe, after the ECB's surprise announcement. Some analysts had been expecting the central bank to say it was preparing a new stimulus program, but most did not expect an announcement as early as this week.

The ECB said it had trimmed its benchmark interest rate to 0.05 percent from a previous record low of 0.15 percent.

In a news conference, ECB President Mario Draghi also said the bank would also start purchases of private sector financial assets in October. The program aims to make credit cheaper, helping investment and growth at a time when the economy of the 18-country eurozone has stalled.

As well as boosting stocks, the announcement caused the euro to slump against the dollar, pushing it to its lowest level against the U.S. currency in more than a year.

Europe's single currency, which has been in retreat over the past few weeks on expectations that the ECB may pursue further stimulus measures, fell 1.5 percent to $1.29 per euro.

There was also encouraging news for investors on the U.S. economy on Thursday.

U.S. services firms expanded in August at the fastest pace on record. The Institute for Supply Management said Thursday that its services index rose to 59.6 last month from 58.7 in July. The August figure is the highest recorded since the measure was introduced in January 2008.

Hiring is also picking up and U.S. businesses added jobs at a healthy pace in August, according to a private survey, the fifth straight month of solid gains.

On Friday, the government will issue the August jobs report. The forecast is that U.S. employers added 220,000 jobs and that the unemployment rate dipped to 6.1 percent from 6.2 percent.

The early gains for stocks then faded in the afternoon as the energy stocks sagged, declining 1.3 percent, as the price of oil dropped.

Among other stocks making big moves, PVH Corp. (NYSE: PVH) was the biggest gainer in the S&P 500.

The company, which owns of the Calvin Klein and Tommy Hilfiger brands, surged $11.25, or 9.6 percent, to $128.30, after reporting earnings that exceeded the expectations of Wall Street analysts.

Government bond prices fell. The yield on the 10-year Treasury note, which moves inversely to its price, climbed to 2.45 percent, from 2.40 percent late Wednesday.

— The Associated Press contributed to this report.

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