Hints of QE3 were quickly seized on for a rally even though talk of more QE was divided. Then came news of the Trade Deficit which economists totally underestimated. Later news came that Bank of America’s (BAC) proposed mortgage related $8.5 billion settlement deal may be in trouble as subpoenas were being delivered. Then a Moody’s downgrade of Ireland to junk status combined with rumors of French banks and France itself facing downgrades, sent the markets down with selling picking up momentum into the close.
With inflationary QE3, commodities rallied led by gold and oil, the euro fell and bonds reversed course with prices closing higher.
Clearly markets and investors are getting worn out by European debt woes not to mention the issues with developments from Washington.