The visitors took the lead inside the opening 27 minutes, courtesy of Pedro Neto but Arsenal articulated a swift response through Brazilian defender Gabriel.
Daniel Podence put Nuno Espirito Santos’ team ahead three minutes before the break and that was enough to inflict Arteta’s side’s fifth defeat of the Premier League season.
The Gunners are without a win in the Premier League since a 1-0 victory over rivals Manchester United at Old Trafford earlier this month - a run of two defeats and one draw.
Arteta believes lack of wins diminishes a team’s confidence and insists Arsenal are suffering from one.
"They had two shots on target in the first half and scored twice. The team showed a real resilience, togetherness and belief to try to win in the second half. We generated the chances but didn't score,” the Spaniard told the media after the game.
"We need more goals to win football matches. We need to keep supporting the players. All players go through [tough] periods. We're creating chances but struggling to score goals. That's the difference between winning and losing.
"When you lose matches the confidence goes down because they believe things can happen again. You need to win after a defeat. We've been doing this in my time here. This is the first time since we've been here [that they've had a losing run]."
Next up for Arteta and Arsenal in the Premier League is a trip across town to face rivals Tottenham Hotspur on Sunday.