Draghi disappointment knocks Wall Street lower
NEW YORK (Reuters) - Stocks fell on Thursday, putting the S&P 500 on track for its fourth straight drop, after European Central Bank President Mario Draghi disappointed investors hoping for immediate action to contain the euro zone debt crisis.
Investors also were on edge ahead of Friday's closely watched non-farm U.S. payrolls report for July. Coming after highly anticipated Federal Reserve and ECB meetings, the jobs report could mean a volatile end to an eventful week.
Draghi said the ECB would gear up to buy Italian and Spanish bonds on the open market but would only act after euro zone governments have activated bailout funds to do the same.
After last week's pledge by Draghi to "do whatever it takes" to save the euro, expectations for strong action had been running high. However, Draghi indicated that any ECB intervention would start at the earliest in September.
"The ECB disappointed and I think we're going to see continued volatility. Not everything Draghi said was negative. There's some hope that something will come of this, but I feel that hope is misplaced," said Michelle Gibley, senior market analyst at Schwab Center for Financial Research in Denver, Colorado.
On the retail front, results from major domestic retailers showed discounts and warm weather drew U.S. shoppers to malls in July, helping many chains report healthy sales gains in what is typically a clearance month ahead of the back-to-school season.
The Dow Jones industrial average was down 159.58 points, or 1.23 percent, at 12,811.48. The Standard & Poor's 500 Index was down 17.85 points, or 1.30 percent, at 1,357.29. The Nasdaq Composite Index was down 23.66 points, or 0.81 percent, at 2,896.55.
"We're pretty much just range-bound, We're stair-stepping as things improve slightly. Corporate earnings are disappointing but not disappointing enough, jobs numbers are disappointing but not disappointing enough, and everyone is sitting back saying are we going get more stimulus, but there's nothing new happening," said Warren West, principal at Greentree Brokerage Services in Philadelphia.
Knight Capital Group Inc shares plunged 56.6 percent to $3.01, a day after a computer glitch at the market maker triggered a spike in volatility shortly after the open. The company said on Thursday an erroneous trading position wiped out $440 million of its capital and will force the firm to raise money.
Economic data showed the number of Americans filing new claims for jobless benefits rose less than expected last week, but the data is influenced by distortions from seasonal auto shutdowns.
It comes on the heels of a stronger-than-expected ADP National Employment Report and before the monthly non-farm payrolls report on Friday.
Friday's report is expected to show that employers added 100,000 new workers to their payrolls last month, according to a Reuters survey, up from 80,000 in June.
June factory orders fell 0.5 percent from May's numbers, missing economists' forecast of a 0.5 rise.
General Motors Co posted a smaller-than-expected loss in Europe that helped the No. 1 U.S. automaker post a better-than-expected second-quarter profit. Shares slipped 3.2 percent to $19.03.
According to Thomson Reuters data, of the 385 in the S&P 500 that have reported second-quarter earnings through Thursday morning, 67 percent have reported earnings above analyst expectations. Over the past four quarters, 68 percent of companies beat estimates.
Gap Inc jumped 9.9 percent to $32.35 after the clothing retailer posted its July and second-quarter sales, but rival Aeropostale plummeted 32.5 percent to $13.12 after cutting its second-quarter forecast.
(Additional reporting by Ryan Vlastelica, editing by Dave Zimmerman)