Market Recap: Market Confidence Low, Europe Struggles, Supercommittee Admits Defeat

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

(Related: Here’s Why Existing Home Sales Climbed in October)

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.]