By CHRISTINA REXRODE
AP business writer
August 07, 2012
NEW YORK — The European Central Bank 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 ECB 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.
Investors had been hoping for clear action from the ECB, such as a cut in interest rates or solid 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.
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 10.14 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. Friday could be another volatile day for the stock market. The Labor Department releases its closely watched monthly jobs report early.
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.”
RETAILERS: It 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.
GENERAL MOTORS: The Detroit automaker says that its second-quarter net profit fell 41 percent on a big loss in Europe.
KELLOGG: Rising costs and weakness in Europe pulled down second-quarter net income, but the breakfast giant’s revenue rose thanks to sales of Pop-Tarts and strength in North America.
KRAFT FOODS: Second-quarter profit jumped more than 5 percent as higher prices helped offset rising raw materials costs and unfavorable currency exchange rates.
AIG: American International Group’s net income rose 27 percent in the second quarter as its property and casualty and life insurance business brought in more revenue.
DUKE ENERGY: Net income rose 2 percent in the second quarter on higher electric rates and lower storm restoration costs.
LUFTHANSA: The German airline blamed high fuel costs and new taxes on air travel in its home and Austrian markets for a 24 percent decline in second-quarter earnings.
DEUTSCHE POST DHL: The German logistics company saw its profit fall 28 percent in the second quarter as a large tax bill took a chunk out of increased sales in emerging markets.
ADIDAS: The sportswear maker reported a nearly 18 percent increase in second-quarter earnings and raised its full-year forecast.
CBS: Net income rose 8 percent in the second quarter, beating analysts’ expectations, even as advertising revenue fell and it took in less money from the sale of program reruns.
LINKEDIN: Net income fell in the latest quarter as the professional networking site spent more money to grow its business. But revenue grew faster than expected, and the company raised its forecast for the year.
SONY: Red ink worsened in the April-June quarter and it lowered its full-year earnings forecast.
SHARP: The Japanese electronics maker is slashing 5,000 jobs over the next year, or nearly 9 percent of its global workforce, after its quarterly loss ballooned from a year earlier.