Market Recap: Funds Dump Stocks to Seal Worst Quarter Since 2008

Markets closed down on Wall Street today: Dow -2.16%, S&P -2.50%, Nasdaq -2.63%, Oil -4.15%, Gold +0.45%.

On the commodities front, Oil (NYSE:USO) fell to $78.73 a barrel. Precious metals were mixed, with Gold (NYSE:GLD) climbing slightly to $1,624.50 an ounce while Silver (NYSE:SLV) fell 2.25% to $29.84 an ounce.

Hot Feature: Are Gold and Silver Bugs Running Scared?

Today’s markets were down because:

1) Europe. The debt crisis in Europe is “all that anybody cares about,” said Dan Greenhaus, chief global strategist at brokerage firm BTIG. As the quarter comes to a close, there are still a number of potential pitfalls ahead, including a decision about Greece’s next tranche of aid from euro-zone finance ministers, who will meet on October 3 to decide whether to release the next 8 billion-euro installment in Greece’s bailout package. Also, only nine of the seventeen nations in the euro zone have ratified measures to increase the European Financial Stability Facility’s rescue fund, a measure many consider necessary to stave off future disaster and economic collapse as the result of the region’s debt crises.

2) Consumer spending. The Commerce Department released its report on consumer spending in August today, which had purchases rising a measly 0.2% as incomes declined for the first time in nearly two years. As a result of stagnating wages, underemployment, and the plunging stock markets, consumer confidence is down, hurting sales at retailers like Target (NYSE:TGT) and Best Buy (NYSE:BBY). Earlier this month, the Commerce Department reported that retail sales, an earlier gauge of household spending, stagnated in August.

3) Banks. It’s been a miserable quarter for banks, and today was no different. Bank of America (NYSE:BAC) shares have declined over 43% in the last three months, making the bank the biggest contributor to the sector’s 17.51% decline. Morgan Stanley (NYSE:MS) came in a close second, with shares declining over 40%, followed by Citigroup (NYSE:C) with a 37.5% decline, Goldman Sachs (NYSE:GS) with a 28.5% decline, JPMorgan (NYSE:JPM) declining 25.5%, and Wells Fargo (NYSE:WFC) bringing up the rear with a 13% decline. While it might not have been a great quarter for tech, the sector declined a slightly less impressive 14%. The sovereign debt crisis has ruled markets all summer, and as a result, banks have been hardest hit, since they are the most exposed to European bond markets.

BONUS: Consumer Sentiment: Is Holiday Cheer Starting to Permeate the Mall?