With no concrete action in Europe, stocks slump

European leaders on Thursday gamely promised to keep tackling the continent's debt crisis. But the markets wanted much more.

Stocks sank across the U.S. and Europe, the euro fell against the dollar and investors dumped bonds issued by the governments of Spain and Italy. Investors had been expecting more immediate action from the European Central Bank and were disappointed by the plan's lack of details, especially considering the ECB president's pledge last week to do "whatever it takes" to keep the euro intact.

A week later, investors' response was more like: "whatever."

It was the second day in a row that markets were disappointed by a lack of decisive action from a major central bank. On Wednesday, stocks closed lower after the Federal Reserve made only vague promises about its plans for trying to revive the U.S. economy.

"It's more jawboning, it's more copy and paste from last week," said Kenny Polcari, managing director of the brokerage ICAP. "There was no definitive plan, and so all the hype and energy (Draghi) created last week is going to go down in flames today."

The Dow Jones industrial average fell 92.18 points to 12,878.88. The Dow had been down as much as 192 shortly after noon.

The Standard & Poor's 500 index fell 10.32 to 1,365. The Nasdaq composite index lost 10.44 to 2,909.77.

It was the fourth day in a row of losses; U.S. stocks haven't risen since ECB President Mario Draghi's now-famous three-word promise one week ago.

Investors had been hoping for clear action from the ECB, such as a cut in interest rates or clear plans to buy more European government bonds, which could lower borrowing costs for troubled countries like Spain and Italy.

But Germany's central bank, which has footed much of the bill for bailing out other European countries, declined to go along. And so Draghi on Thursday had to tell a highly anticipated news conference that the ECB "may" intervene in the bond market. He promised the ECB would consider other emergency measures in coming weeks.

The yield, or interest rate, on Spain's benchmark 10-year bond jumped to 7.06 percent from 6.68 percent late Wednesday, making it more expensive for the country to borrow money. The yield on Italy's 10-year bond rose to 6.30 percent from 5.85 percent. Other countries have been forced to seek bailouts once their rates rose above 7 percent.

To be fair, the ECB faces a Herculean task with no easy solutions. Whatever it does is sure to offend someone. Some of the weaker countries, like Greece, have lodged their own resistance to other ECB measures, such as demands for spending cuts meant to help countries achieve sustainable budgets.

It's also unrealistic for investors to expect quick fixes to a problem that was so long in the making, said Christian Bertelsen, chief investment officer of Global Financial Private Capital in Sarasota, Fla.

In the U.S., he noted, there was a half-year lag between the Treasury Department announcing it would buy stakes directly in banks in the fall of 2008 and investors becoming comfortable by the spring of 2009 that there wouldn't be uncontrollable bank failures.

"People look at Euroland and say, `Why don't they get something done there?'" Bertelsen said. "How quickly they forget what a miserable six months it was here."

In the U.S., thoughts of Europe were close at hand. General Motors and Kellogg reported lower quarterly profits and put some of the blame on Europe.

In other trading:

_Knight Capital Group, the trading firm whose technical glitch sent trading of dozens of stocks into chaos early Wednesday, lost 63 percent of its value, plunging $4.36 to $2.58. In two days, it has lost 75 percent of its value.

_Abercrombie & Fitch dropped 15 percent and Aeropostale dropped 33 percent after both companies warned of weak second-quarter sales. Abercrombie lost $4.96 to $29.06. Aeropostale lost $6.37 to $13.08.

_A smattering of positive signs about the economy got lost in the greater maelstrom. Retailers including Target, Limited Brands and Gap announced that July sales beat expectations. Shares of all three companies climbed, with the biggest increase at Gap. It rose 13 percent, gaining $3.75 to $33.17.

By CHRISTINA REXRODE
AP Business Writer

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8 thoughts on “With no concrete action in Europe, stocks slump

  1. Rumor I heard this morning about a Russian ship (ships) in the eastern Mediterranean Sea off the coast of Syria caused oil to rise. If they go ashore--moreso.

  2. DISCIPLINE in financial markets is necessary, like it or not. THE FREE MARKET NOT WORKED and it will not work. Our best financial private and public sector bears testimony to this, while we all pay so little gained.
    Public finances have to be adjusted as soon as possible under pain of greater social costs. While we must promote a new global regulation for the financial market which for convenience we did open and operates virtually worldwide.
    Not much choice, and buying time is not the best remedy.

  3. Disiplina y más disiplina. EL MERCADO LIBRE NO FUNCIONO y no va a funcionar...
    Afrontar las consecuencias de las condiciones que permitimos hiciera el mercado (legalmente) y pongamos nuevas reglas del juego para evitar el pago del equivoco del manejo financiero. La utilidades se privatizan, las perdidas se socializan... ESO NUNCA ESTARA BIEN...

    "DISCIPLINE DISCIPLINE and more. THE FREE MARKET NOT WORKED and it will not work ...
    Addressing the consequences of the conditions that allow the market to do (legally) and put new rules to prevent mistaken payment of financial management. The utilities are being privatized, losses are socialized ... THAT NEVER WILL BE WELL ..."

    Translated by Google Translate - Jeremy

  4. her şeyi sıfırlayarak işe başlamak gerek yoksa buiş düzelmeyecek korkarım herkez borçlarını ödememek için bir bahane bulmuş olacak

    "I'm afraid you do not need to start out by resetting everything düzelmeyecek Buis everyone will have found an excuse to avoid paying debt"

    Translated by Google Translate - Jeremy

  5. I think we should be very grateful. Who and Whatever influences and shakes the markets allows us to make money, provided you see the markets as what they are and how they react to the fundamentals. That is where the pleasure comes from in playing the markets. Imagine food without pepper and salt, would you have pleasure eating it?

  6. The fed can only do so much. With the federal government in the USA crippled by traitors and the state governments actually adding to the problem of lack of employment and low wages, under the same traitors, the macroeconomic outlook is gloomy indeed. Doesn't mean businesses can't do well, however. Cheap labor and an explosively wealthy top 1% are good for stock prices overall and good for businesses that increasingly channel their sales efforts at the well to do..

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