YAHOO [BRIEFING.COM]: The S&P 500 lost 2.5% this week, and about two-thirds of that loss took place on Monday as concerns intensified about Italy's fiscal situation. Europe's fragile financial state remained in focus throughout the week, but commentary about the potential for QE3 took over mid-week after the FOMC minutes revealed discussion among Fed members about the potential for additional monetary policy stimulus, depending on how economic conditions evolve.

Ben Bernanke reiterated this stance in Wednesday's appearance in front of the House Financial Committee, but on Thursday he acknowledged that the Fed is not prepared to act at this point in time. It seems only natural that the Fed would be discussing such matters given the recent deterioration in economic data, but the mere discussion of the potential doesn't necessarily increase the odds of further accommodation (weakening employment data amid a disinflationary environment would). The market retraced the initial gains made in reaction to the FOMC minutes and day one of the Bernanke speech.

Then toward the end of the week, focus shifted to ratings agency warnings about the U.S. credit rating. Both Moody's and Standard & Poor's said the U.S. was at risk for a downgrade if it isn't able to agree on a debt ceiling increase in time. There was a negative response in the market to each of these actions, but the markets quickly recouped their losses, as the warnings didn't really bring about anything that wasn't already known.

Also today, the market digested the second round of European bank 'stress tests.' The tests showed 82 of 90 banks passed with a total of 20 banks seeing their Core Tier 1 Requirements below the 5% threshold over the two-year time horizon. The count shows five Spanish banks, two Greek banks, and one Austrian bank failing the test. While the test did show some failures, many are already discounting the tests as using unrealistically favorable loss assumptions.

After Monday's large drop, the broader market had a hard time maintaining traction in either direction, but the overarching drift has been to the downside, despite positive earnings reports from Google (GOOG), JP Morgan (JPM) and Citigroup (C). Next week the earnings floodgates open with more than 300 companies reporting their Q2 results, including IBM, MOS, STLD, BAC, KO, GS, JNJ, WFC, AAPL, YHOO, ABT, MO, BLK, USB, UTX, ADS, AXP, BIDU, EBAY, FFIV, INTC, QCOM, T, DO, LLY, F, FCX, MS, PEP, SNDK, WDC, CAT, GE, HON, MCD, SLB, VZ, and XRX, to name a few.

This week's data didn't do much to excite investors either. Looking at today's data, we got a disappointing Empire Manufacturing Survey reading of -3.8 for July. The consensus among economists surveyed by Briefing.com had called for a reading of 1.0 after a reading of -7.8 was posted for the prior month. Consumer price inflation data were also just reported. Overall CPI for June decreased by 0.2%, which is a bit cooler than the 0.1% decrease that had been broadly anticipated. Core CPI increased by 0.3%, which is slightly hotter with the Briefing.com consensus call for a 0.2% increase.

Crude oil gained steam in the afternoon session and recovered almost one point as it rose through the $97 mark. By the end of today's floor trading session, crude was about $1.55/barrel higher at $97.24/barrel, which is about a half of a point under its session high.

Natural gas extended gains this afternoon and hit new highs on today's session at $4.53/MMBtu. It closed just under that high at $4.52/MMBtu, up 3.7%.

Precious metals continued on the uptrend that began this morning. Gold ran to session highs of $1592.40/oz and remains near that level in electronic trade. Silver saw the same uptrend and finished the day 1% higher at $39.07/oz.

Grains ended the day mixed with corn futures 6 cents higher at $6.85/bu, wheat 12 cents lower at $6.95/bu and soybeans up 3 cents at $13.87/bu

Advancing Sectors: Energy +2.6%, Tech +1.0%, Materials +0.8%, Consumer Staples +0.2%, Utilities +0.1%,
Declining Sectors: Health Care -0.5%, Financials -0.4%, Consumer Discretionary -0.2%, Industrials -0.2%.DJ30 +42.68 NASDAQ +27.13 SP500 +7.29 NASDAQ Adv/Vol/Dec 1516/1.77 bln/1054 NYSE Adv/Vol/Dec 1814/1.06 bln/1190