Wall Street drops on Draghi disappointment

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.

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.

"I think market participants wanted to see some concrete, clear plans on how they're going to approach the issue as it pertains to Spain, and the bigger situation of the European nations," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.

"If he thinks that just by talking and making bold statements that he can fix the situation, and that's all he needs to do, then he's sadly mistaken. He's out of touch."

On the retail front, early results showed discounts and warm weather drew U.S. shoppers to malls in July, helping many chains to report healthy sales gains in what is typically a clearance month ahead of the back-to-school season.

The Dow Jones industrial average <.dji> dropped 134.26 points, or 1.04 percent, to 12,836.80. The Standard & Poor's 500 Index <.spx> dropped 15.26 points, or 1.11 percent, to 1,359.88. The Nasdaq Composite Index <.ixic> dropped 18.27 points, or 0.63 percent, to 2,901.94.

European stocks reversed course and turned negative after Draghi's statement, with the FTSEurofirst 300 index <.fteu3> ending down about 1 percent. <.eu/>

Knight Capital Group Inc shares plunged 51 percent to $3.40, 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.

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 0.05 percent to $19.65.

According to Thomson Reuters data, of the 362 companies in the S&P 500 that have reported earnings through Wednesday evening, 66.6 percent have beaten analysts' expectations. Over the past four quarters, 68 percent of companies beat estimates.

Gap Inc jumped 9.5 percent to $32.22 after the clothing retailer posted its July and second-quarter sales, but rival Aeropostale plummeted 31.1 percent to $13.40 after cutting its second-quarter forecast.

(Editing by Dave Zimmerman)

Source: http://news.yahoo.com/stock-index-futures-signal-firmer-open-093453643--finance.html

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