explode explosion

Photo: Air Force

Obliteration!But first, the scoreboard:

Dow: -387.37
NASDAQ: -79.69
S&P 500: -36.19

And now, the top stories:

  • The “day” really started yesterday around 2:20 when the FOMC released its highly anticipated “Operation Twist” announcement. Markets were already down modestly heading into that, but the selloff got serious after that, and stocks really fell out of bed. To some extent, the selling was a “sell-the-new” kind of thing, and perhaps to some extent some were disappointed that Bernanke didn’t go further. Alongside the announcement, yields on long-term Treasuries plunged through the floor.
  • Not long after the market closed, more bad news from Washington came: The House voted down a bill to keep the government open. A government shutdown is a real possibility.
  • That selling carried through. Asia got smoked across the board last night. Hong Kong fell 4.8%. Korea fell another 2.9%. What’s more, Chinese flash PMI came in weak, confirming slowdown fears there.
  • But the real pain was in Europe, where French banks continue to be at the centre of the show. They got demolished on all kinds of ugly headlines, like Mohamed El-Erian talking about a huge run on them (in an FT piece) and a story about BNP Paribas going to the Mideast looking for fresh cash. This of course lead to selling in everything else, and all the major indices got destroyed. Clearly the crisis is not a “Greek” crisis anymore. The banking system has been infected. Europe, too, clocked in with a bad PMI report. The slowdown is real.
  • And the follow through continued in the U.S. Dow futures were already pointing to a loss of about 200 points when at 8:30 AM we got (yet) another disappointing initial claims report. Later at 10:00AM, we did actually get a surprisingly good reading from the FHFA home price index, but nobody cared.
  • Markets trashed everything and everyone all day. Stocks got clobbered (never mounting anything resembling a comeback), commodities got destroyed, gold got smashed, oil fell below $80, and the Swiss Franc continued to cede its supersafehaven status. Only the yen, the dollar, and US Treasuries (where yields continue to plumb fresh lows) turned in positive/respective showings. BTW: If gold investors are bummed about the 4% decline today, silver investors, who lost over 8% should be annoyed.
  • There wasn’t much mitigating on the corporate front today. FedEx, the ultimate economic bellwether, warned about next quarter’s earnings. Bank of America fell because, well, it’s Bank of America. Morgan Stanley got really hit on concerns over its French bank exposure. From the tech world, reports seemed to confirm that Meg Whitman will be the next CEO of Hewlett-Packard once it gets around to actually firing the current CEO, Leo Apotheker.
  • Meanwhile, click here to see 15 stocks that everyone wants to short >

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