The bears took the reins right out of the gate today, as re-emerging concerns about the fiscal fate of Europe weighed on Wall Street. After digesting Italian Prime Minister Silvio Berlusconi's vow to resign, it seems investors are now questioning the debt-strapped country's political and financial trajectory -- and, more importantly, what that could mean for the euro zone. Reflecting the uncertainty surrounding Italy, a mass exodus of the nation's debt holders sent 10-year yields skyrocketing north of the key 7% rate, and pressured the euro more than 2% lower against the greenback for only the fourth time this year. As the bearish stars aligned, the Dow Jones Industrial Average (DJIA) swallowed a hefty triple-digit drop, and the CBOE Market Volatility Index (VIX - 36.16) -- or the market's "fear barometer" -- soared to its loftiest settlement in more than a month.
After falling as low as the 11,736.93 level in afternoon trading, the Dow Jones Industrial Average (DJIA – 11,780.94) pared its loss to a still-steep 389.2 points, or 3.2%. As a result, the Dow ended the session south of its 10-day and 20-day moving averages for the first time since Oct. 4. In fact, not one of the index's 30 components eked out a win, with JPMorgan Chase (JPM) pacing the decliners with a 7.1% drop.
The S&P 500 Index (SPX – 1,229.10) ended near a session low, surrendering 46.8 points, or 3.7%, by the time the bell mercifully sounded. Likewise, the Nasdaq Composite (COMP – 2,621.65) plunged 105.8 points, or 3.9%, when all was said and done. Like the Dow, both the SPX and COMP gave up their footholds atop their 10-day and 20-day trendlines.
Turning to equities in focus, Adobe Systems (ADBE) projected weaker-than-expected revenue ... General Motors (GM) stepped into the earnings confessional ... Credit Suisse weighed in on Walgreen Company (WAG) ... Rovi Corporation (ROVI) offered lackluster guidance for 2011 ... Option bears honed in on Honeywell (HON) ... and today's Quote of the Day comes from Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-KY). While most of Wall Street was focused on Europe, President Obama made headlines on the home front after announcing a war on wasteful spending -- including that on government "swag". However, Stewart argues, that's essentially the spendthrift pot calling the kettle black, stating:
"I guess when you're throwing money at bankrupt solar companies, you need to do something to distract the White House press corps."
But these weren't the only headlines hitting the Street today. Click on the links below for our blog coverage of:
And, in case you missed it, Schaeffer's contributor Adam Warner offered a cautionary (and topical) tale on faux correlation. Click here to see why the VIX may or may not be a predictor of celebrity marriage news.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
The Case for Big Moves in IWM and QQQ
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