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Stocks fell, but it could have been much worse.But first, the scoreboard:

Dow: -75.68
NASDAQ: -32.91
S&P 500: -11.99

  • Yesterday stocks finished the final leg of the biggest 3-day market rally since March 2009. The hot streak was not to continue, and in large part you blame Europe.
  • Germany reported 0.1% GDP growth in Q2. That was well worse than the 0.5% that analysts had been looking for, and it confirmed that the “engine” of Europe was not immune to the ills of its neighbours. Even if its own credit isn’t considering a risk, it can’t grow as an exporting country when its end markets aren’t buying.
  • Also in Europe, today was the big Merkel-Sarkozy meeting/press conference that was anticipated all weekend. And… it was basically a big flop in the sense that they hardly said anything new. They certainly didn’t announce anything eurobond-ish or bazooka-ish. Sarkozy did talk about a Tobin Tax on financial transactions, which (presumably) banks won’t be too excited about it. Bear in mind this was around 12:30 PM ET, and while markets had been close to even at that point, they sold off sharply after their presser.
  • Stepping back a bit, something that might not have been market news, but which was talked about quite a lot was Rick Perry’s comments last night about treating Ben Bernanke “ugly” if he stepped in Texas, and how more monetary easing might constitute treason.
  • In the pre-market in the US, the news was mixed. The good news is that industrial production and capacity utilization came in surprisingly strong for July. In fact it was the best month of the year. The bad news is that new home sales flopped again, as did permits.
  • There was also a bunch of retail news this morning. While earnings from Home Depot and Wal-Mart were a bit better than expectations, Dick’s, the specialty sports retailer came in bad. Also a weekly survey retail survey showed shoppers running into speedbumbs. Full retail roundup here >
  • One ominous aspect the day: really heavy selling in the banks once again. Bank of America, Citigroup, Morgan Stanley all down pretty solidly.
  • Finally, lots more talk about the Google deal to buy Motorola-Mobility. Google lost 3% on the news.
  • Meanwhile, check out some of the stocks that are most aggressively being shorted right now >