Stocks fell for a fourth
consecutive day on Thursday after the president of the European Central Bank,
Mario Draghi, disappointed investors hoping for immediate action to contain
Europe’s debt crisis.
The losses on Wall Street, at
less than 1 percent, were not as severe as those in the euro zone markets,
where declines ranged from 2.2 percent in Germany to 5.2 percent in Spain.
Although the markets were
focused mostly on the European Central Bank, traders were also looking ahead to
Friday’s closely watched employment report in the United States, which could
bring a volatile end to an eventful week.
Mr. Draghi said the central
bank was willing to start buying Italian and Spanish government bonds to hold
down borrowing costs, but it would act only after euro zone governments moved
first. The announcement surprised traders, who had thought that central bank
action was imminent after Mr. Draghi pledged last week to do “whatever it
takes” to save the euro.
“People were looking for concrete steps and an outline of exactly
what path the E.C.B. would take to do that, and there weren’t any,” said Brian
Gendreau, market strategist with the Cetera Financial Group. “Just as the
market went up on the ‘whatever it takes’ comments, it is coming down on the
lack of specificity.”
Wall Street rallied late last
week in part on hopes for new economic stimulus from the Federal Reserve but
mostly as expectations grew that the European Central Bank would finally take
action to protect the euro. But the Fed took no new steps to support the
economy on Wednesday, although it said it was ready to act if needed.
Friday’s employment report
could give a stronger indication whether the Fed, which has a freer hand than
the European Central Bank, will act soon.
The government reported on
Thursday that the number of Americans filing new claims for jobless benefits
rose last week and that manufacturers suffered an unexpected drop in orders in
June, suggesting that the economy is struggling to break out of a soft patch.
The Dow Jones industrial
average fell 92.18 points, or 0.71 percent, to 12,878.88. The Standard &
Poor’s 500-stock index dropped 10.14 points, or 0.74 percent, to 1,365. The
Nasdaq composite index lost 10.44 points, or 0.36 percent, to 2,909.77.
Shares of the Knight Capital
Group, one of Wall Street’s top market makers, plunged after a trading glitch
that spread turmoil in the stock market on Wednesday wiped out $440 million of
the company’s capital. The stock closed down 62.8 percent at $2.58, its lowest
level since early October 1998.
Among other issues, General
Motors slipped 2.6 percent, to $19.14, after it posted a smaller-than-expected
loss in Europe that helped it report a better-than-expected second-quarter
profit.
Gap jumped 12.8 percent to
$33.17 after the clothing retailer posted its July and second-quarter sales,
but the rival Aéropostale plummeted 32.8 percent to $13.08 after cutting its
second-quarter forecast.
In the credit markets, the
Spanish government’s 10-year bond yield rose above 7 percent again after the
European Central Bank failed to take immediate action.
Investors instead turned once
more to the perceived safety of the United States government debt. The price of
the Treasury’s 10-year note rose 13/32, to 102 15/32, while its yield fell to
1.48 percent from 1.52 percent late Wednesday
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