Market Recap: What Did Europe Do This Time?

Markets closed down on Wall Street today: Dow -2.11%, S&P -1.86%, Nasdaq -1.92%, Oil -0.36%, Gold -2.45%.

On the commodities front, Oil (NYSE:USO) fell to $97.32 a barrel. Precious metals were also down, with Gold (NYSE:GLD) falling to $1,682.80 an ounce while Silver (NYSE:SLV) fell 2.44% to settle at $31.58.

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Today’s markets were down because:

1) Europe. Mariano Rajoy and his conservative People’s Party won the biggest majority in a Spanish election in almost 30 years on Sunday, but despite Rajoy’s pledge last night in his victory speech that Spain would “stop being a problem and become part of the solution again,” investors were unsurprisingly not relieved. While Rajoy’s absolute majority means he will have no trouble pushing through heavy-handed austerity measures that will make the EU happy, the general consensus now seems to be that only eurobonds or a massive bond purchasing program can effectively tackle the sovereign debt crisis and put an end to its rampage through Europe, both of which have met with heavy opposition from the euro zone’s biggest players.

2) Congress. The 12-member congressional supercommittee tasked with finding at least $1.2 trillion in budget savings over the next decade essentially declared defeat today after three months of talks ended in a stalemate, finally quashing any remaining hope that Congress can put aside party politics in order to compromise for the sake of getting things done. Without a debt deal, automatic spending cuts will kick in at the beginning of 2013 — cuts that deal a heavy blow to both social programs and defense spending, thus dealing both Republicans and Democrats a heavy blow.

3) Banks. Though selling was broad today, financial shares were the biggest losers, as usual. JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Bank of America (NYSE:BAC) all declined more than 3%.

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