European leaders on Thursday gamely promised to keep tackling the continent's debt crisis. But the markets wanted much more.
Stocks sank across the U.S. 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 for trying to revive the U.S. economy.
"It's more jawboning, it's more copy and paste from last week," said Kenny Polcari, managing director of the brokerage ICAP. "There was no definitive plan, and so all the hype and energy (Draghi) created last week is going to go down in flames today."
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.
It was the fourth day in a row of losses; U.S. stocks haven't risen since ECB President Mario Draghi's now-famous three-word promise one week ago.
Investors had been hoping for clear action from the ECB, such as a cut in interest rates or clear plans to buy more European government bonds, which could lower borrowing costs for troubled countries like Spain and Italy.
But Germany's central bank, which has footed much of the bill for bailing out other European countries, declined to go along. And so Draghi on Thursday had to tell a highly anticipated news conference that the ECB "may" intervene in the bond market. He promised the ECB would consider other emergency measures in coming weeks.
The yield, or interest rate, on Spain's benchmark 10-year bond jumped to 7.06 percent from 6.68 percent late Wednesday, making it more expensive for the country to borrow money. The yield on Italy's 10-year bond rose to 6.30 percent from 5.85 percent. Other countries have been forced to seek bailouts once their rates rose above 7 percent.
To be fair, the ECB faces a Herculean task with no easy solutions. Whatever it does is sure to offend someone. Some of the weaker countries, like Greece, have lodged their own resistance to other ECB measures, such as demands for spending cuts meant to help countries achieve sustainable budgets.
It's also unrealistic for investors to expect quick fixes to a problem that was so long in the making, said Christian Bertelsen, chief investment officer of Global Financial Private Capital in Sarasota, Fla.
In the U.S., he noted, there was a half-year lag between the Treasury Department announcing it would buy stakes directly in banks in the fall of 2008 and investors becoming comfortable by the spring of 2009 that there wouldn't be uncontrollable bank failures.
"People look at Euroland and say, 'Why don't they get something done there?'" Bertelsen said. "How quickly they forget what a miserable six months it was here."
In other trading:
—Knight Capital Group, the trading firm whose technical glitch sent trading of dozens of stocks into chaos early Wednesday, lost 63 percent of its value, plunging $4.36 to $2.58. In two days, it has lost 75 percent of its value.
—Abercrombie & Fitch dropped 15 percent and Aeropostale 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 signs about the economy got lost in the greater maelstrom. Retailers including Target, Limited Brands and Gap 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.