YAHOO [BRIEFING.COM]: A loss of confidence in the economic recovery led to a deep, broad-based selloff that sent stocks reeling. Though the broader market suffered its worst loss of the past few weeks, it was able to secure support just above a key technical line.

Market participants turned pessimistic after China reported some weaker-than-expected retail sales figures and a slight dip in industrial production during July. Japan's lackluster machinery orders report and moderate economic outlook didn't help.

The Bank of England also failed to counter waning confidence in a steady global recovery with its statement that risks to growth are still to the downside.

Those announcements come after the Fed stated again yesterday that the economic recovery is likely to be more modest in the near term.

Coupling the underwhelming announcements with the stock market's inability to build on the gains of recent weeks, investors took the opportunity to rotate out of stocks. The selling effort was largely indiscriminate as 495 of the 500 members of the S&P 500 fell to a loss - Macy's (M 20.52, +1.14) was one of the few to stage a gain after it reported better-than-expected quarterly earnings and raised its outlook.

Such widespread weakness caused the S&P 500 to slice through its 200-day simple average, but it held steady just above its 50-day average of 1088.

Treasuries ticked higher as participants sought safety. In turn, the benchmark 10-year Note dropped to a 14-month low and ended the day around 2.68%.

Treasuries showed a muted response to results from a $24 billion auction of 10-year Notes. Dollar demand for the auction was a solid $73 billion, up from the prior auction and above recent averages, but the bid-to-cover came in at 3.0, which is below the prior auction and recent averages. The yield on the auction came in at 2.73%.

Oil prices plummeted 2.8% to close pit trade just above $78 per barrel, and also just above the commodity's 200-day simple moving average as concerns about economic growth came into play.

Natural gas showed strength, though. The commodity was able to advance 0.7% to $4.33 per MMBtu.

Precious metals prices diverged as gold prices climbed as high as $1208 per ounce before pulling back to $1199.70 per ounce, where they settled with a fractional gain, and silver prices sank 1.3% to $17.82 per ounce.

The dollar also found favor among investors. After the close the Dollar Index continued to sport a 1.9% gain, its best performance of the past year. Most of that move came against the euro, which plummeted 2.4%. In contrast, the yen set a fresh 15-year high versus the dollar early this morning, but it eased back above the widely watched level of 85 yen per dollar in afternoon trade. DJ30 -265.42 NASDAQ -68.54 NQ100 -2.8% R2K -4.0% SP400 -3.4% SP500 -31.59 NASDAQ Adv/Vol/Dec 283/2.26 bln/2348 NYSE Adv/Vol/Dec 442/1.16 bln/2622