Stocks Drop as Hopes Dim for Swift ECB Action

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Wall Street took a hit after the European Central Bank failed to offer fresh stimulus measures to snuff out the continent's debt crisis and traders braced for a round of U.S. jobs data.

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Today's Markets

The Dow Jones Industrial Average futures dropped 92.2 points, or 0.71%, to 12879, the S&P 500 sunk 10.1 points, or 0.74%, to 1365 and the Nasdaq Composite fell 10.4 points, or 0.36%, to 2910.

The Federal Reserve on Wednesday held U.S. monetary policy steady, hinting more strongly than before that more action may come down the line if the economy deteriorates further. The Bank of England and European Central Bank followed suit on Thursday, keeping their interest rates and quantitative easing program on hold.

ECB President Mario Draghi last week hinted that the central bank is willing to do what it takes to stem the debt crisis that has gripped eurozone economies for more than two years. However, at a press conference Thursday he made more allusions to action, without actually announcing any specific measures. Draghi said the ECB may begin outright open market operations, which could mean the central bank will step into beleaguered bond sovereign debt markets. He also suggested eurozone countries activate the bloc's rescue funds for potential bond buying. Still, the commentary fell short among world trading desks.

"While we were initially encouraged by these comments our encouragement quickly gave way to reservations," Dan Greenhaus, chief global strategist at BTIG wrote in an email. "After all, these remain promises. Investors are tired of promises."

Indeed, bourses in Spain and Italy ended the ay close to 5% to the downside.

Elsewhere in Europe, Spain sold roughly $3.8 billion in 10-year debt at interest rates that were nearly 1 percentage point below where it sold the same bonds at the last auction. Yields were still the second-highest ever paid by the country, according to a report by Reuters. 

That good news faded quickly as well after the commentary from the ECB. The yield on Spain's 10-year bonds on the secondary market jumped 0.23-percentage point to 6.97%, a painfully high level.

On the U.S. front, planned layoffs by U.S. firms fell 1.9% in July from the month before to 36,855, according to a report by outplacement firm Challenger, Gray & Christmas. Later in the morning, traders will get fresh data on weekly jobless claims. Economists expect 370,000 individuals to have applied for first-time jobless benefits last week, up from 353,000 the week before. An unusual trend in U.S. auto plant retooling has caused volatility in the weekly reports recently.

The big monthly jobs report is on tap for Friday. Economists forecast the U.S. economy to have tacked on 100,000 jobs in July from June, with the unemployment rate holding steady at 8.2%.

In commodities, oil sold off. The benchmark contract traded in New York dropped $1.78, or 2%, to $87.13 a barrel. Wholesale New York Harbor gasoline jumped 1.3% to $2.87 a gallon.

In metals, gold fell $16.60, or 1%, to $1,591 a troy ounce.

Foreign Markets

The Euro Stoxx 50 dropped 3% to 2363, the English FTSE 100 slid 0.88% to 5662 and the German DAX sold off by 2.2% to 6606.

In Asia, the Japanese Nikkei 225 edged up by 0.13% to 8653 and the Chinese Hang Seng fell 0.66% to 19690.

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