Dow down 33 points

Wall Street surrendered early gains and closed lower today as a higher US trade deficit and questions about the labour market dampened enthusiasm over a policy change at the Bank of Japan.

The US market was cheered after the Japanese central bank signalled an end to its current interest rate policy, set in place five years ago to fight inflation and also lift a sagging economy.

The new policy, focused less on rising prices and more on Japan’s growing economic strength, encouraged US investors worried about the Federal Reserve’s stance on interest rates and inflation.

“Now you have the Bank of Japan, the European Central Bank and the Federal Reserve all with the same interest rate policy, and that’s very positive,” said Peter Cardillo, chief strategist, and senior vice president at SW Bach & Co.

“It’s a strong indication that global central bankers will contain inflation and not necessarily choke off economic activity, which has been a big concern here.”

However, the session’s gains slipped away by early afternoon as investors focused on increasing unemployment claims, which climbed above the 300,000-mark for the first time in eight weeks, and awaited the Labour Department’s monthly job creation report, due tomorrow.

A new record for the US’s trade gap also darkened investors’ mood, which has soured in recent days amid continued uncertainty over the economy and the Fed’s interest rate policy.

The Dow Jones industrial average fell 33.46, or 0.3%, to 10,972.28.

Broader stock indicators also fell. The Standard & Poor’s 500 index lost 6.24, or 0.49%, to 1,272.23, and the Nasdaq composite index dropped 17.74, or 0.78%, to 2,249.72.