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ECB not buying bonds? US stocks slide.

European Central Bank cuts interest rates but says it has no plan for large-scale purchases of European government bonds. Shares on Wall Street fall in early trading.  

By Matthew CraftAP Business Writer / December 8, 2011

The European Central Bank (ECB) President Mario Draghi speaks during the monthly news conference in Frankfurt, Dec. 8, 2011. The ECB cut its main interest rate by 25 basis points to 1.0 percent but said it had no plans for large-scale government bond purchases. US stocks fell in early trading.

Ralph Orlowski/Reuters

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NEW YORK

U.S. stocks are sliding in early trading Thursday after the head of the European Central Bank said there was no existing plan for large-scale government bond purchases, as many in the markets had hoped.

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ECB President Mario Draghi's remarks came after the bank cut its benchmark interest rate and took other modest steps to help shore up Europe's financial system. His comments also sent the euro lower against the dollar.

Bank stocks led the way down. Citigroup dropped 3.9 percent. Morgan Stanley fell 3.3 percent.

The Dow Jones industrial average fell 42 points, or 0.4 percent, to 12,154 as of 10 a.m. (1500 GMT). JPMorgan Chase & Co. slid 2.4 percent, the most of the 30 large companies in the Dow.

The Standard & Poor's 500 index fell 8, or 0.6 percent, to 1,253. The Nasdaq slipped 10, or 0.4 percent, to 2,638.

In France, French President Nicolas Sarkozy and German Chancellor Angela Merkel tried to muster support from other European leaders for their latest bid to save the euro currency from collapsing under the weight of huge government debts. A summit that begins later Thursday has been billed as a make-or-break moment to convince markets that Europe will take bold enough action to prevent the euro from breaking up.

Among companies making large moves, Costco Wholesale Co. fell 2.5 percent after reporting earnings that fell short of analysts" expectations. The retailer said higher costs ate up much of a 12.5 percent increase in sales.

Amgen rose 1.4 percent after it said it plans to spend about $5 billion on buying back its stock from investors. The drugmaker expects to acquire more than 9 percent of its outstanding stock.

DemandTec Inc. jumped 55 percent after International Business Machines Corp. said it would by the software company for $440 million in cash. DemandTec's software helps businesses set prices and create marketing strategies for products they sell.

MEMC Electronic Materials Inc. jumped 7.4 percent, the most in the S&P 500 index. The solar energy company said it would eliminate 20 percent of its workforce and cut other costs.

The stock market's drop came despite new figures showing that the number of people applying for unemployment benefits fell last week to the lowest level in nine months.