YAHOO [BRIEFING.COM]: A spike in oil prices amid percolating geopolitical tension in the Middle East prompted participants to pare their positions. Their steady selling effort left stocks to settle at session lows with sharp losses.

The tone of trade in the early going was actually positive, but buyers began to lose interest as Europe's major bourses drifted lower, even though Germany, France, the United Kingdom, and the broader eurozone all posted solid PMI Manufacturing data. A jump in oil prices before the open of pit trade also undermined early strength.

Oil prices rallied 2.7% to settle at $99.63 per barrel, a two-year closing high. Even after the close oil prices flirted with $100 per barrel in electronic trade. Oil's strength started with morning reports that Saudi Arabia sent tanks into neighboring Bahrain, where social unrest continues to be of concern in a region largely responsible for the world's oil supply. Indicative of the tensions surrounding the region, Saudi Arabia's stock market slumped 7%.

As oil prices pushed higher, participants pressed stocks lower, eventually spurring a broad-based sell-off that left more than 90% of the S&P 500 in the red. That took the Volatility Index up close to 15%.

Precious metals rallied as many sought safety. Silver settled with a 2.0% gain at $34.41 per ounce and gold gained 1.4% to close at $1431.20 per ounce. Silver extended its climb after the close of pit trade so that the continuous contract hit a new 30-year high above $34.60 per ounce. Gold prices hit a record high above $1434 per ounce after pit trade ended.

Although precious metals were strong, materials stocks dropped 2.3% for the worst loss of any major sector. Financials weren't far behind; they dropped 2.2%. Fifth Third (FITB 13.95, -0.65) was one of the financial sector's weakest performers following news that the SEC has subpoenaed the regional bank in connection with certain commercial loans.

The SEC also sent a subpoena to Las Vegas Sands (LVS 43.70, -2.94) in regard to compliance with the Foreign Corrupt Practices Act. CNBC reported that the SEC has filed suit against former Goldman Sachs (GS 161.31, -2.47) Board Member Rajat Gupta regarding allegations of insider trading. Gupta reportedly will step down from the Board of Procter & Gamble (PG 62.74, -0.31).

Economic data did nothing to stymie selling efforts today. The ISM Manufacturing Index for February hit a multi-year high of 61.4 to exceed the Briefing.com consensus of 60.5. However, construction spending for January fell 0.7%, which is a bit steeper than the 0.6% decline that had been broadly anticipated.

Fed Chairman Bernanke delivered his semi-annual monetary policy report to the Senate Banking Committee this morning. He was optimistic of the economic outlook, but made no new revelations.

It was a very eventful session for commodities, as events in the Middle East sent jitters through select commodity markets, including the hypersensitive crude oil market.

Precious metals rallied for 1.8% today, led by a 2% rally in May silver, which closed at $34.41 per ounce. April gold futures gained 1.4% to close at $1431.20 per ounce. Both metals rallied on the flight to safety. Gold traded to a fresh all-time high at $1433.40, in after hours trade, besting its Dec 7 highs by $2.30. Silver traded to a new ~30 yr high at $33.82.

April WTI crude oil rallied for 2.7% to close at $99.63 per barrel, its highest close in ~2.5 yrs. Concerns about the unrest in the Middle East and further potential supply disruptions sent the WTI contract back toward $100 in the final minutes of trade. April natural gas shed 3.9% to close at $3.88 per MMBtu. Prices fell as bearish fundamentals continue to undermine any upward momentum.

Advancing Sectors: (None)
Declining Sectors: Materials (-2.3%), Industrials (-2.2%), Financial (-2.2%), Consumer Discretionary (-1.8%), Tech (-1.7%), Telecom (-1.7%), Energy (-1.5%), Utilities (-1.0%), Health Care (-0.7%), Consumer Staples (-0.5%)DJ30 -168.32 NASDAQ -44.86 NQ100 -1.5% R2K -2.0% SP400 -1.7% SP500 -20.89 NASDAQ Adv/Vol/Dec 618/2.22 bln/2032 NYSE Adv/Vol/Dec 724/1.18 bln/2298