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Futures Fall After ECB Takes No Action

U.S. stock index futures are pointing to a sharply lower open, after the European Central Bank fell short of market expectations at its meeting today. The ECB failed to take undertake immediate action to buy bonds. ECB chief Mario Draghi only said that the central bank may undertake outright open market operations within its mandate and that it will design plans over the coming weeks for such measures.

Earlier, the ECB left its key benchmark interestrate unchanged at 0.75 percent. The ECB is waiting to see whether inflation and the economy slow before moving to cut borrowing costs further.

“This was a big disappointment for the market because it was not immediate action,” Marc Chandler, chief currency strategist at Brown Brothers Harriman said. "All major central banks did nothing but hold out the promise of big action next month. This is a big reversal on the euro.”

The Bank of England left its monetary policy unchanged as well today despite signs of growing economic weakness. In July, the Bank expanded its buying of government bonds to provide additional stimulus.

Yesterday, U.S. stocks ended the session with modest losses, after the Federal Reserve disappointed investors when it stopped short of announcing further stimulus measures. The central bank did hint that more stimulus could be forthcoming should economic conditions warrant. (Read More: Should Bernanke Have Done More?).

Turning to economic news, the U.S. Labor Department reported that initial jobless claims for the week ending July 28 rose to 365,000 from 357,000 the prior week. Economists were looking for initial claims of 370,000.

According to a report from consultants Challenger, Gray & Christmas, employers announced 36,855 planned job cuts in July, down 1.9 percent from June.

Factory orders for June will be released at 10 a.m. Analysts polled by Briefing.com forecast a 0.6 percent rise in orders, versus a 0.7 percent rise in May.

After a computer glitchat brokerage firm Knight Capital Group sparked volatile trading in 140 individual stocks at the open on Wednesday, the firm said in a press release today that the issue was related to Knight's installation of trading software and resulted in Knight sending numerous erroneous orders in NYSE-listed securities into the market. Knight said clients were not negatively affected by the erroneous orders.

Knight has traded out of its entire erroneous trade position, which has resulted in a realized pre-tax loss of approximately $440 million. While the company's capital base was severely impacted, Knight said its broker/dealer subsidiaries are in full compliance with their net capital requirements.

In earnings news, General Motors earned 90 cents per share for the second quarter, 16 cents above estimates, though revenue fell slightly short of estimates.

Retailers are reporting their monthly same-store sales, with many seeing healthy sales as warm weather and sales brought U.S. shoppers to the stores. American Eagle raised its second-quarter guidance to 19 cents to 21 cents per share, versus analyst estimates of 15 cents. The teen retailer says sales are stronger than it had previously expected.

Abercrombie & Fitch , meanwhile, warned that second-quarter profit will be about half of what analysts had been expecting, as it experiences a double-digit drop in same-store sales.

Health insurer Cigna earned $1.52 per share, excluding certain items, for the second quarter, beating consensus by 10 cents. Revenue also beat estimates, and Cigna raised its full-year forecast as membership numbers grow.

Life insurer MetLife reported second-quarter earnings of $1.33 per share, beating estimates. The insurer was able to negate the effects of low interest rates through its use of derivatives.

Also, Prudential Financial earned an adjusted $1.34 per share for the second quarter, on better-than-expected revenues.

Yelp reported a second-quarter loss of 3 cents per share, narrower than the 6 cent loss analysts were expecting. Revenues beat forecasts, and the customer review website operator raised its revenue forecast for the remainder of 2012.

Sony earnings disappointed, after the Japanese firm reported a 77 percent fallin operating profit to 6.28 billion yen ($80.27 million) in the three months to June 30.

Kraft, AIG and LinkedIn will report after the closing bell.

Coming Up This Week:

THURSDAY: Factory orders; Earnings from Teva Pharmaceuticals, Time Warner Cable, AIG, Kraft, Activision Blizzard, LinkedIn, Sunoco, Opentable, Zipcar

FRIDAY: Employment situation, ISM non-mfg index; Earnings from P&G, Toyota, Beazer Homes, NYSE Euronext, Berkshire Hathaway

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