Stocks are down on lack of direction

Posted: August 03, 2012

NEW YORK - European leaders on Thursday gamely promised to keep tackling the continent's debt crisis. But the markets wanted much more.

Stocks sank across the United States 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 European Central 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.

A week later, investors' response was more like: "whatever."

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 to revive the U.S. economy.

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.

In the United States, thoughts of Europe were close at hand. General Motors Co. and Kellogg Co. reported lower quarterly profits and put some of the blame on Europe.

In other trading:

Abercrombie & Fitch Co. dropped 15 percent and Aeropostale Inc. 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.

A smattering of positive news about the economy got lost in the greater maelstrom.

Retailers including Target Corp., Limited Brands Inc. and Gap Inc. announced that July sales beat expectations. Shares of all three companies climbed, with the biggest increase at Gap. It rose 13 percent, gaining $3.75 to $33.17.

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