The ECB failed to make the dramatic recession-fighting decisions hoped for by EU officials and analysts -- instead it made modest moves to cut interest rates and offer banks long-term funds.
ECB president, Mario Draghi, made it explicitly clear that the national bank will not, and cannot, play a strong role in averting the financial crisis and reining in the looming recession.
According to Reuters, he "discouraged expectations that the bank would massively step up buying of government bonds if European Union leaders agree on moves toward closer fiscal union at a crucial Brussels summit."
Instead, the ECB says the eurozone's EFSF rescue fund should remain the main tool to fight bond market contagion, despite the limits of its leverage. He added that it would be illegal for the ECB or other central banks to lend money to the IMF to buy euro bonds (via Reuters).
Of course, the ECB will not be completely out of the picture. "They'll stay in the market but will only buy small amounts. It's governments who'll have to do the heavy lifting," explains James Nixon, chief European economist at Societe Generale SA in London.
The market has been increasingly convinced that the ECB would save the euro. This setback sent global markets into a dive and put further pressure on the Summit in Brussels. Investors are still hoping for a make-it-or-break it measure to come from the meetings.
But they shouldn't get their hopes up. German Chancellor Angela Merkel played down the Summit's expectations by saying the meeting will be "one stop" along the way to ending the EU's debt troubles.
But could whatever news comes out of Brussels drag the market down further? How much more negativity could the market price in?
Analysts expect that if the news comes out even slightly positive that the markets may rally, or at least recover some of today's losses.
To find ideas on which stocks might be in for the greatest rallies, we created a list of large-cap companies with bearish short trends. Short-sellers think these stocks will drop in price, but will these names see a short squeeze if good news comes out of Brussels? (Click here to access free, interactive tools to analyze these ideas.)
1. Avalonbay Communities
2. Continental Resources
3. Campbell Soup
5. FMC Technologies
6. General Motors
7. Ivanhoe Mines
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Short data sourced from Yahoo! Finance.