At the close of U.S. trade, the Dow Jones Industrial Average dropped 0.71%, the S&P 500 index declined 0.74%, while the Nasdaq Composite index gave back 0.36%.
Sentiment broadly weakened after Draghi said the ECB may undertake bond purchases in order to bring down the "exceptionally high" borrowing costs of stressed euro zone members, but provided no explicit details on how and when these activities may be carried out.
The statement disappointed market expectations for bold steps to counter the debt crisis in the euro zone, which have been building since Draghi pledged last week to do whatever is necessary to preserve the euro.
The ECB left interest rates unchanged at a record low 0.75% earlier.
Rattling U.S stock markets, large market making firm Knight Capital Group plunged over 60% on an algorithmic glitch that may result in the firm’s bankruptcy after losing $400 million.
Financial stocks were broadly lower, as shares in Citigroup tumbled 1.68% and Goldman Sachs plunged 1.53%, while JP Morgan and dropped 0.83%.
Among earnings, Abercrombie & Fitch saw shares sink 12.87%, after the retail company 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.
Sony was also sharply lower, with shares plummeting 6.84% after the Japanese firm reported a 77% fall in operating profit to JPY6.28 billion yen in the second quarter.
On the upside, health insurer Cigna gained 2.88%, after saying revenue beat estimates and raising its full-year forecast as membership numbers grow.
Elsewhere, global agribusiness group Monsanto jumped 1.33%, after it was awarded USD1 billion in damages in a patent infringement trial against DuPont and its agricultural crop subsidiary DuPont Pioneer.
Also in company news, American International Group added 0.16% on reports it is looking to buy back a large chunk of its shares from the U.S. government, whose stake in the group could subsequently go below 50% by this autumn, according to the Wall Street Journal.
Meanwhile, Rupert Murdoch’s News Corp saw shares retreat 0.22%, although the company announced earlier that it had gained regulatory approval to buy Consolidated Media Holdings in a AUD2 billion deal that could possibly strengthen its hold on pay-television in Australia.
Other stocks in focus included Kraft, AIG and LinkedIn, due to publish results after the closing bell.
At the close of European trade, the EURO STOXX 50 plunged 3.00%, France’s CAC 40 fell 2.68%, while Germany’s DAX 30 gave back 2.20%.
Investors are anxiously awaiting the non farm payrolls and ISM non manufacturing index from the U.S. on Friday.