Market Recap: Speculation Leaves Markets Unsure Where to Land

Markets closed mixed on Wall Street today:

• Dow +0.43 percent
• S&P +0.11 percent
• Nasdaq -0.23 percent
• Oil 0.00 percent
• Gold -0.14 percent

On the commodities front:

• Oil (NYSE:USO) remained flat at $100.99 a barrel
• Gold (NYSE:GLD) fell to $1,732.00 an ounce
• Silver (NYSE:SLV) climbed 1.57 percent to settle at $32.88

(Related: Geithner: Fed Will Not Contribute to IMF-Led Bailout)

Today’s markets were mixed because:

1) Bazooka: Stocks rallied through most of the day on an unconfirmed report that European leaders are working on a plan to combine various rescue funds into a so-called big “bazooka.”

European officials are working on a last-minute proposal to combine the resources of the existing bailout fund with those of the new one to debut next year, reports the Financial Times. The newspaper also said the funds could be supported in some way by the International Monetary Fund. Countries like Germany might be more willing to support such measures if they are successful in creating a tighter fiscal union that holds sovereign governments accountable to a higher authority on budgetary matters.

2) Standard & Poor’s: A rumor emerged in the last hours of trading yesterday that Standard & Poor’s would soon be putting all of the euro zone on watch for a credit downgrade. The news interrupted a market rally that had the major indices up more than 1.5 percent. The rumor was confirmed later in the evening, when the credit rating agency said it had placed 15 of the 17 euro nations — including Germany, France, and four other AAA-rated countries — on review for a possible downgrade. Though stocks rallied on the Financial Times report, the “bazooka effect” was ultimately tempered by concern that the downgrade of a euro-zone country would lead to the European Financial Stability Facility being downgraded, which would cause the rescue fund’s interest costs to rise, and therefore inhibit its ability to support the struggling sovereigns.

3) Stocks: The conglomerates sector was the best performer today, buoyed by 3M, which announced it expected 2012 sales to grow 2 percent to 6 percent year-over-year in 2012, with EPS rising to $6.25 to $6.50. Shares were up 1.48 percent to $82.13 at close. Darden Restaurants wasn’t quite so lucky — the stock plunged 11 percent after the company, which operates Red Lobster and Olive Garden, issued a gloomy outlook for the quarter and fiscal year.

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