Markets closed down on Wall Street today:
- Dow -2.11 percent
- S&P -1.86 percent
- Nasdaq -1.92 percent
- Oil -0.36 percent
- Gold -2.45 percent
On the commodities front:
- Oil (NYSE:USO) fell to $97.32 a barrel.
- Gold (NYSE:GLD) fell to $1,682.80 an ounce
- Silver (NYSE:SLV) fell 2.44 percent to settle at $31.58
Today’s markets were down because:
1) Europe: Mariano Rajoy and his conservative People’s Party won the biggest majority in a Spanish election in almost 30 years on Sunday, but despite Rajoy’s pledge last night in his victory speech that Spain would “stop being a problem and become part of the solution again,” investors were unsurprisingly not relieved.
While Rajoy’s absolute majority means he will have no trouble pushing through heavy-handed austerity measures that will make the EU happy, the general consensus now seems to be that only eurobonds or a massive bond purchasing program can effectively tackle the sovereign debt crisis and put an end to its rampage through Europe.
2) Congress: The 12-member congressional supercommittee tasked with finding at least $1.2 trillion in budget savings over the next decade essentially declared defeat today after three months of talks ended in a stalemate, finally quashing any remaining hope that Congress can put aside party politics in order to compromise for the sake of getting things done.
Without a debt deal, automatic spending cuts will kick in at the beginning of 2013 — cuts that affect both social programs and defense spending, thus dealing both Republicans and Democrats a heavy blow.
3) Banks: Though selling was broad today, financial shares were the biggest losers, as usual. JPMorgan, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of America all declined more than 3 percent.
[Editor's note: the above is a cross post that originally appeared on Wall St. Cheat Sheet.]