RALLY COLLAPSES, GOLD AND BANKS GET HAMMERED: Here's What You Need To Know

Sam Ro | Dec. 13, 2011, 4:00 PM | 967 | 1

For a change, things were looking better in Europe, while things were looking worse in the U.S.

First, the scoreboard:

Dow: -68.3 pts, -0.6%
S&P 500: -10.7 pts, -0.9%
NASDAQ: -33.0 pts, -1.3%

And now, the top stories:

Europe was actually looking a little less bad this morning. Spain had a bond auction that went better than expected. Germany's ZEW economic confidence index, a key measure of sentiment in Europe, unexpectedly improved to -53.8 from -55.2. This was the first increase in this measure in 10 months. U.S. futures spiked and markets were set to open higher.
However, news out of the U.S. retail front was somewhat worrisome. November retail sales only grew by just 0.2%, missing economists expectation for 0.6% growth. Ex-autos and gas, growth was also 0.2%, missing the expectation of 0.4%.
Also regarding retail, Best Buy announced disappointing earnings and guidance this morning. Same-store sales climbed just 0.3%. And to get that, Best Buy had to boost promotional activities, which crushed the company's profit margins. Management expects fiscal 2012 same-store sales to be flat to down. The stock closed down 15.5%. See Also: How Best Buy Became Such A Steaming Disaster >
Gold prices and the euro tumbled today. Meanwhile, crude oil prices spiked north of $100 per barrel today. Reports that Iran would close the Strait of Hormuz raised concerns of supply disruptions. See Also: The 10 Biggest Gold-Hoarding Countries In The World >
Morgan Stanley settled lawsuits with MBIA regarding mortgage-backed securities deals. Morgan will book a pre-tax loss of $1.8 billion. MS closed down 1.4%.
JP Morgan, on the other hand, may have some new legal problems on its hands. According to Bloomberg, regulators will be investigating the bank's role in the fall of MF Global. Shares of JPM immediately dropped as the headline crossed. The stock closed down 2.3%.
Chatter of a Netflix takeover by Verizon continued. Bloomberg reports that these talks are ongoing, but CNBC's David Faber says, "word I get is that no one at Verizon has ever discussed buying NFLX with anyone."
The FOMC decision statement was released a few minutes before 2:15 today. The Fed noted that the economy was "expanding modestly," but that it would keep its Fed funds target rate at low levels "at least through mid-2013." Also, Chicago Fed Governor Charles Evans dissented again. The statement said he "supported additional policy accommodation." No real surprises here. But given the instant sell-off, it seems markets may have been hoping for some more easing or at least hints of easing.
Don't Miss: MORGAN STANLEY: This Is What The World's Big Currencies Will Do In 2012 >