Markets closed down on Wall Street today: Dow -2.69%, S&P -2.67%, Nasdaq -2.42%, Oil -2.04%, Gold +0.01%.
On the commodities front, Oil (NYSE:USO) fell to $87.23 a barrel. Precious metals were mixed, with Gold (NYSE:GLD) climbing slightly to $1,857.70 an ounce while Silver (NYSE:SLV) fell 1.95% to $41.70 an ounce.
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Today’s markets were down because:
1) Jürgen Stark. The resignation of one of the European Central Bank’s executive board members was taken as an undeniably bad sign for the economic outlook in Europe, especially because his resignation was thought to be the result of a dispute over the ECB’s bond-buying program. Stark’s resignation immediately had the euro dropping against a basket of global currencies, and had European markets tumbling as well. Of course, the fact that the ECB lowered its economic growth forecast yesterday, and decided to hold interest rates at 1.5% rather than raise them as it has done at the beginnings of the last two quarters, may have had something to do with the continuing sell off today.
2) Greece. It’s been a while since the southern European nation was at the forefront of global economic concerns, but the small Mediterranean country now looks extremely likely to default on its obligations. In fact, many suspect that Greece could default on its government debt as soon as this weekend. Germany has already begun to shore up its banks to defend against such an eventuality. A lot of major banks could go under if Greece were to default, as it would trigger capital requirement problems. People are pulling their money out of equities markets as they wait to see what happens.
3) Fast food. The world’s largest restaurant chain, McDonald’s (NYSE:MCD), reported disappointing same-store sales for the month of August, citing higher commodity costs, which forced the company to raise food prices, as the main factor. For that same reason, many of the chain’s fast-food competitors are also trading lower today, with the same high commodity costs hurting their bottom lines as well. Starbucks (NASDAQ:SBUX), Burger King (BKC), Wendy’s (NYSE:WEN), Yum! Brands (NYSE:YUM), Darden Restaurants (NYSE:DRI), Jack in the Box (NASDAQ:JACK), and Tim Hortons (NYSE:THI) were all trading significantly lower today.