STOCKS DEMOLISHED, EUROPE NEAR BREAKING POINT: Here's What You Need To Know

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Photo: flickr user: davehunt82

Get ready for a stressful weekend!But first, the scoreboard:

Dow: -301.07
NASDAQ: -60.05
S&P 500: -30.40

And now, the top stories:

  • The big story: Europe appears to be within days of some kind of breaking point. There have obviously been huge concerns about the next Greek bailout and whether it would happen (and with 2-year yields at 55% on Greek debt, it’s obvious that the market has been sceptical for a while). Pre-market there was chatter about a Greek default as soon as this weekend. Then at around 9:20, it came out that a top hawk was leaving the ECB, further emphasising the lack of cohesion at this crucial institution. And then worries got even more heightened when, this afternoon, it was reported that Germany was planning a fund of sorts to bail out its own banks, in the event of a Greek default. While it’s good news that Germany is planning on ring-fencing its financial system, the news was taken as a further signal to the market that Greece is on the edge. Click here to see the full explanation of why people are freaking out >
  • Let’s go back a bit though: Last night we got the big jobs package from Obama, and initially it was taken as a fairly big “plus.” Not only was it bigger than some had expected, but the GOP didn’t line up to kill it right away, as some presumed they would. So there’s some daylight on that front. Click here to see what economists thing about Obama’s big announcement >
  • Initially the futures rallied nicely post-Obama, and they were still higher this morning, but eventually the freakout in Europe dragged down US markets.
  • Also at the same time as Obama, reports came out of a terrorist threat (specific and credible) that could coincide with this weekend’s 9/11 anniversary. That never appeared to have a specific market impact, however.
  • And mostly that was it: Panic about Europe obviously overwhelmed any presumed additional marginal stimulus from Obama.
  • Final tally: Stocks got killed, the euro got crushed, and the dollar went wild, against both the euro and the Swiss Franc. Gold also had a really solid day. And of course, Treasury yields hit a brand new historical low.
  • On the corporate front, the big news is that layoffs at Bank of America might reach 40k.
  • For a reminder of what you should worry about in Europe, see here.

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