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Stocks posted a double-digit gain in October.  But the markets ended the month with Europe bringing everyone back to reality.

First, the scoreboard:

Dow: -276.1 pts, -2.3%
S&P 500: -31.8 pts, -2.5%
NASDAQ: -52.7 pts, -1.9%

And now, the top stories:

  • Global stock markets had been rallying big time after last Wednesday’s huge EU leaders’ summit.  However, European debt markets have been telling us that there continued to be major problems in the area.  This morning, stock markets finally caught on to Italy’s woes when the cost of Italian debt soared this morning.  Italy is the third largest economy in the eurozone.  We’ve been alerting MoneyGame readers to this red flag for a while.  People clearly have little faith in Silvio Berlusconi’s ability to turn the country around.   Most major European markets closed down 3%. Italy’s FTSE MIB Index closed down 4%.
  • Late in the U.S. trading session, Bloomberg reported that Greek Prime Minister Papandreou wanted to hold a referendum on new reforms.  This really spooked markets, which slid further after the news.
  • One firm that suffered from making bad bets in Europe was MF Global, which finally filed for bankruptcy today.  DealBook reported that Interactive Brokers was in talks to buy parts or all of the company as late as last night.  But those talks obviously fell apart.  MF shares were halted today.  However, shares of JP Morgan, MF’s largest unsecured creditor, traded and they fell 5.3%.
  • MF’s bankruptcy filing was affecting more than just the shareholders.  A CME trader told us that trading activity on the floor dried up as MF Global was a major clearing firm. And MF wasn’t allowed into the building. Some even attributed the selloff in gold to MF Global.
  • In economic news, the Chicago PMI, which measures manufacuring activity in the midwest, fell to 58.4, missing expectations that the number would fall to 59.0.  The news obviously didn’t help stocks.
  • Meanwhile, Yahoo! is reportedly considering selling off its Asian assets and using the cash to pay out a dividend.  Shareholders didnt seem to crazy about this. The stock dropped 5.6%.
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