Stocks Open Sharply Lower, Draghi Disappoints

U.S. stocks began in a steep decline on Thursday as European Central Bank President Mario Draghi failed to deliver hoped for action to address Europe’s debt crisis. The Dow Jones Industrial Average lately fell 72.54 points to 12,898.52. The S&P 500 index declined 7.32 points to 1,367.82. The Nasdaq Composite lost 4.54 points to 2,915.67.

The European Central Bank will draw up a mechanism in the coming weeks to make outright purchases to stabilise stressed euro zone borrowing costs, ECB President Mario Draghi said on Thursday. The European Central Bank earlier kept its key lending interest rate unchanged at 0.75%. Draghi pledged at an investment conference in London last week that the ECB was ready to do “whatever it takes” within its mandate to preserve the euro.

The number of Americans filing new claims for jobless benefits rose less than expected last week, but the data continues to be influenced by distortions from seasonal auto shutdowns. Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 365,000, the Labor Department said on Thursday. The prior week’s figure was revised up to 357,000 from the previously reported 353,000.

Trading firm Knight Capital is being forced to raise money after an erroneous trading position wiped out $440 million of the firm’s capital, Knight said in a statement on Thursday.

A big loss in Europe dragged down General Motors’ second-quarter profit. The automaker’s net income from April through June fell 41 percent to $1.5 billion, $1 billion less than the same quarter a year earlier, GM said on Thursday.

Rising costs and weakness in Europe pulled down Kellogg’s second-quarter net income, but the breakfast giant’s revenue rose thanks to sales of Pop-Tarts and strength in North America. For the three months ended June 30, the maker of Frosted Flakes cereal and other products earned $301 million, or 84 cents per share. That’s down 12 percent from $343 million, or 94 cents per share, a year earlier.  Revenue edged up 2 percent to $3.47 billion. That beat Wall Street’s estimate of $3.38 billion.