Market Recap: Stocks Tumble on Europe and Higher Oil Prices

Markets closed down on Wall Street today:

• Dow -0.58 percent
• S&P -0.66 percent
• Nasdaq -1.73 percent
• Oil +2.48 percent
• Gold -1.03 percent

On the commodities front:

• Oil (NYSE:USO) climbed to $101.83 a barrel
• Gold (NYSE:GLD) fell to $1,763.80 an ounce
• Silver (NYSE:SLV) fell 2.11 percent to settle at $33.73

(Related: Oil Breaks $100 and Continues to Outperform Equities)

Today’s markets were down because:

1) Europe: Yields on sovereign debt continued to hit record highs in more countries around the euro zone today, and the region’s hardest-hit economies are showing no signs of improving. Now even Germany’s debt level is a “cause for concern,” according Luxemburg Prime Minister Jean-Claude Juncker.

Germany got fewer bids than its maximum target at an auction of two-year notes, as the government agreed today to pay the lowest yield on record. With Germany seemingly entering the fray, investors grew increasingly concerned that European Central Bank intervention might be necessary. Meanwhile, though Italy and Greece’s new governments are moving forward, their leaders have yet to prove that they can effectively stamp out the debt crisis before it spreads.

2) U.S.: While the European crisis continues to worsen, investors are clinging to hope offered by reports demonstrating that the U.S. economy might be resilient enough to continue to grow, despite the increasing drag of Europe. Two separate reports today showed homebuilder confidence rising for the second straight month, and industrial production rising more than expected.

Meanwhile, U.S. Treasuries got a boost, with the yield on the benchmark 10-year note down to 2.02 percent today from 2.06 percent late Tuesday. The news was enough to buoy markets for a bit, but ultimately the drag of Europe and climbing oil prices resulted in a late rout that saw markets tumbling from slightly positive territory deep into the red.

3) Banks: Bank stocks remained under pressure amid questions as to how Europe’s sovereign debt crisis could affect global financial institutions. Shares of Goldman Sachs, Morgan Stanley, Citigroup, Bank of America and Jefferies were among the markets’ biggest losers today.

[Editor’s note: the above is a cross pot that originally appeared on Wall St. Cheat Sheet.]