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Market Recap: Silence From Europe & the Fed Drives Stocks Down


Markets closed down today:

▼ Dow: -0.71 percent

▼ Nasdaq: -0.36 percent

▼ S&P: -0.74 percent

Precious metals:

▼ Gold: down -0.65 percent to $1,589.55 an ounce

▼ Silver: down -0.87 percent to settle at $27.10


▼ Oil: -1.72 percent

Markets closed down because:

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.

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 10.32 to 1,365. The Nasdaq composite index lost 10.44 to 2,909.77.

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.

The Associated Press contributed to this report.

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