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With no concrete action in Europe, stocks slump
Markets slide after the European Central Bank produces no concrete action on debt crisis
By The Associated Press

NEW YORK (AP) "Whatever it takes" became just "whatever."

The European Central Bank disappointed financial markets Thursday when it decided against taking new action to attack the continent's debt crisis. Stock indexes, which had been up in pre-market trading, slumped as soon as investors realized that the ECB's president, Mario Draghi, wasn't going to offer a specific new game plan.

Hopes had been high that the ECB would offer more than the usual vagaries and good intentions, after Draghi promised a week ago to do "whatever it takes" to preserve the euro.

Stocks also fell in Europe, and the euro lost ground against the dollar. Spain and Italy's borrowing costs soared, a sign that investors aren't sure those countries will be able to pay their bills.

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

By late morning, the Dow Jones industrial average was down 107 points to 12,864. The Standard & Poor's 500 index fell 12 to 1,363. The Nasdaq composite index lost 11 points to 2,910. It was the fourth day in a row of losses; U.S. stocks haven't risen since Draghi's promise last Thursday.

For investors who had been hoping for strong-armed action from a central bank, it was the second disappointment in as many days. Wednesday, U.S. stocks fell after the Federal Reserve made a similarly noncommittal promise about plans to stimulate the U.S. economy, saying it would take more action if things got worse.

Investors had thought Draghi might announce a specific plan, like buying more bonds to force down borrowing costs for Spain and Italy. The yield, or interest rate, on Spain's benchmark 10-year bond jumped to 7.06 percent from 6.68 percent late Wednesday. The yield on Italy's 10-year bond rose to 6.29 percent from 5.85 percent.

European stock markets also fell sharply following the lack of action from the ECB. Benchmark indexes fell 4.5 percent in Spain and 4 percent in Italy.

To be fair, the ECB faces a Herculean task with no easy solutions. Whatever it does is sure to offend someone, and skeptics doubt that it has any tools left in its arsenal that could make a big difference. Some of the weaker countries in Europe, like Greece, have been resistant to the spending cuts the ECB has tried to impose as part of a solution.

Draghi appeared to suggest that the ECB is developing measures to address Europe's debt crisis. He said that any bond market intervention would be "of a size adequate to reach its objectives."

Europe's problems continued to haunt the earnings of U.S. companies. General Motors and Kellogg reported lower quarterly profits, which they attributed partly to Europe.

Knight Capital Group, the trading firm that took the blame for a technical glitch that sent trading of dozens of stocks into chaos early Wednesday, lost nearly half of its market value, losing $3.46 to hit $3.48 per share. Knight said it would suffer a $440 million loss because of the trading problems.

Among other stocks making big moves, Abercrombie & Fitch tumbled 15 percent, and Aeropostale dropped 32 percent, after pre-announcing weak second-quarter sales. Abercrombie lost $5.29 to $28.75. Aeropostale lost $6.19 to $13.26.

Bristol-Myers Squibb, the drug company, fell 7 percent after suspending a study of a potential hepatitis C treatment, citing patient safety issues. The company lost $2.53 to $33.07.

There were some positive signs about the economy but they got lost in the stronger maelstrom. Retailers including Target, Limited Brands and Gap announced that July sales had beat expectations. Shares of all three companies were up in early trading. Gap rose the most, climbing 9 percent, or $2.60, to $32.02.

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