12/14/2011 @ 1:25PM

Selloff Smacks Stocks, Euro, Oil And Gold As Dollar Firms Up

Wall Street followed European markets south Wednesday, stumbling through a choppy session before cutting their losses in afternoon trading.

Italian bond yields jumped anew, triggering a fresh reminder that Europe’s debt crisis is barely contained and deep divisions persist between the governments trying to rectify the situation.

The market came off its lows though, after a Dow Jones Newswires report that quoted an unidentified French government official saying the country has not been warned by Standard & Poor’s that a downgrade of its AAA credit rating is forthcoming. S&P put the ratings of a slew of eurozone credits on negative watch recently, including the AAA ratings of France and Germany, and said it would wrap up its evaluations as quickly as possible following the recent EU Summit.

In afternoon trading the euro moved off its lows of the session, back to the $1.30 level, while the Dow Jones industrial average cut its decline to 77 points at 11,878. The S&P 500 was down 8 points at 1,218, and the Nasdaq 31 points at 2,548. There were not any winners in the commodity pits , as crude oil dropped $4.25 to $95.89 a barrel and gold fell out of bed, down $75.10 to $1,588 an ounce.

The safety trade was in full force, as the dollar rallied and U.S. Treasuries picked up steam even though the Federal Reserve and Chairman Ben Bernanke did not signal that another round of quantitative easing is imminent at their meeting Tuesday. The 10-year Treasury yield, which moves opposite its price, fell below 1.93%.

First Solar was among the day’s big losers, plunging 18.8% after cutting its 2011 forecast and offering weaker 2012 guidance than the Street anticipated.

Green Mountain Coffee Roasters fell 5.2% after a Stifel Nicolaus analyst warned of a decline in end consumer demand for the company’s Keurig coffee brewers and concerns about increased competition once certain patents expire in September 2012.

Caterpillar lost 3.6%, even though the Dow component said it expects 10-20% revenue growth next year, while General Electric managed to buck the broader trend for a slim 0.3% gain after the company signaled its intent to increase dividends in line with earnings growth at its Investor Day Tuesday.

http://www.forbes.com/sites/steveschaef ... -firms-up/