Fin24

US stocks slide after ECB holds fire

2012-08-03 08:02

New York - US stocks slid for a fourth straight day on Thursday, as the European Central Bank took no action to address the eurozone sovereign debt crisis but suggested it may intervene on the markets to lower borrowing costs.

Both the ECB and the Bank of England maintained current monetary policies at meetings Thursday, a day after the US Federal Reserve also held the status quo, disappointing investors hoping for new economic stimulus.

The major indices started the day with sharp opening losses and showed few signs of recovery as the day progressed.

The Dow Jones Industrial Average was down 92.18 points at 12,878.88 points at the close.

The tech-rich Nasdaq came the closest to making gains, hitting the break-even early in the day, before resuming its southward drop.

The Nasdaq lost 10.44 points to close at 2,909.77.

The S&P 500, a broad measure of the markets, dropped 10.14 points to 1,365.00.

ECB president Mario Draghi, in a post-meeting news conference, said the central bank "may undertake outright open market operations of a size adequate to reach its objective."

"The European Central Bank talked tough but offered no immediate measures to try to solve the eurozone sovereign debt and economic crisis," Charles Schwab & Co. analysts said.

New US unemployment benefit claims rose by 8 000 last week, the Labor Department reported, matching Wall Street expectations.

The markets were awaiting Friday's official numbers on the July unemployment rate and jobs, after three straight months of weak job growth.

The United States was expected to have added 100 000 jobs - only 20 000 more than in June - as the unemployment rate remained stuck at 8.2%.

Earnings season continued in the spotlight.

General Motors, which posted a decline in July US auto sales on Wednesday, reported better-than-expected profit in the second quarter but revenues that missed estimates. GM shares were down 2.6%.

Shares of Knight Capital Group plunged 62.8% after the trading firm estimated a $440m loss due to its erroneous trades Wednesday, which it blamed on a software glitch.

Alcoa led the Dow decliners, falling nearly three percent.

Bond prices surged higher. The 10-year Treasury yield declined to 1.48% from 1.54% on Wednesday, while the 30-year fell to 2.55% from 2.61%. Bond yields move inversely to prices.