YAHOO [BRIEFING.COM]: The near 2% drop suffered by the stock market this session was its worst single-day decline in more than a month. The aggressive sell-off came in response to concerns that the European Union is struggling to help countries in its periphery restore their financial health.

An emergency meeting during the weekend stirred speculation that European Union officials may be considering including Italy in any new bailout packages. Concerns about Italy's financial health began to intensify last week, as evidenced by the spike in yields there.

Worry that the EU remains so far from resolving the threats of countries in the region's periphery sank many of Europe's major bourses. Both France's CAC and Germany's DAX dropped more than 2% in their latest round of trade. Italy's FTSE fell 4%.

Such weakness imbued domestic stocks and prompted participants to sell any gains that they had scored during the course of the past couple of weeks. In turn, the broad-based S&P 500 dropped precipitously. It didn't really secure any support until it came into close contact with its 50-day simple moving average just below the 1320 line.

Financials fell the hardest. The sector's near 3% tumble came amid weakness in banks, insurers, and diversified financial services alike. Only a handful of stocks in the sector were able to limit their losses to less than 1%.

All 30 Dow components settled in the red. Alcoa (AA 15.92, -0.46) was one of the poorest performers ahead of its quarterly report, which marks the unofficial start to earnings season. A few other blue chips will report quarterly results later this week, but announcements won't begin in earnest for several more days.

The Dollar Index hit its best level since March as traders dumped the euro in pursuit of the relative safety offered by the greenback. At the end of the day the dollar was quoted with a 1.2% gain against a basket of competing currencies.

Gold had attracted strong buying interest in the early going, but the precious metal had to fight to settle with a gain. After gold prices had been up by about 1%, they retreated to the neutral line. The precious metal was able to rebound to $1549 per ounce for a 0.5% gain on the day.

The focus in the commodity markets was largely on the ongoing situation in Europe/sovereign debt concerns. With Greece in the so called rear view mirror for the time being, concerns about Italy and Italian banks are now taking center stage. Those concerns caused for the precious metals to trade higher earlier this morning in a flight to safety. Both metals, however, sold off sharply in mid-morning trade. Gold traded back to the flat line but was able to retrace some of its sell-off to close with modest gains; up $7.40 to $1549.00 per ounce. Silver futures fell over a point to lows at $35.54, but bounced modestly into the close to close lower by 2.1% to $35.76 per ounce.

August crude oil finished the session lower by 1.1% to $95.19 per barrel. The concerns about Italy, coupled with the Chinese inflation data, weighed on crude futures throughout the session. Crude notched lows at $94.14, its lowest levels in a week, but managed to bounce modestly off those lows heading into the close. August natural gas finished higher by 2% to $4.29 per MMBtu, helped by higher-than-average temperatures across the country.

Advancing Sectors: (None)
Declining Sectors: Financials -2.8%, Materials -2.1%, Energy -2.0%, Consumer Discretionary -2.0%, Industrials -1.8%, Tech -1.8%, Health Care -1.4%, Telecom -1.1%, Utilities -1.1%, Consumer Staples -0.7%DJ30 -151.44 NASDAQ -57.19 NQ100 -1.8% R2K -2.2% SP400 -2.2% SP500 -24.31 NASDAQ Adv/Vol/Dec 456/1.79 bln/2178 NYSE Adv/Vol/Dec 427/829 mln/2594