YAHOO [BRIEFING.COM]: The major market averages dropped dramatically again today. The sell-off stemmed from heightening fears related to the macro environment.

Stocks were under pressure from the start of trade. Initial weakness was owed to the aggressive selling displayed abroad. Asia's averages all fell more than 1% overnight, but things were even more volatile in Europe, where Germany's DAX dropped 6.0%, France's CAC fell 5.4%, and Britain's FTSE finished with a 4.6% loss.

Europe's dramatic drop was driven largely by concerns about the health of the region's financial firms in the presence of tighter liquidity and ongoing macro threats. Amid such threats, an unnamed institution borrowed some $500 million from the European Central Bank. Domestic banks were implicated by that action, despite recent efforts by executives of Bank of America (BAC 7.01, -0.45), JPMorgan Chase (JPM 35.19, -1.38), and their ilk to assuage worries about their capital levels and general operational health. As a group, financials collectively fell 5.0%.

Energy stocks, industrials, and materials had even poorer performances. The energy sector (-5.7%) was hurt most by a near 6% drop in oil to $82.38 per barrel; oil's slide reflected the market's concern about economic growth. Similar concerns weighed on the industrial sector (-5.7%) and materials sector (-5.8%), given their sensitivity to the broader business cycle.

Utilities did the best job of limiting losses. Their relatively tame 1.3% loss is owed to an increased preference among participants for companies with stable businesses, healthy balance sheets, and relatively rich dividend yields.

Data was generally underwhelming and, in one case, downright dour. Participants first digested news that the latest initial jobless claims tally increased to 408,000, which narrowly exceeds the 400,000 claims that had been broadly expected, after the first dip below 400,000 since April during the prior week.

Consumer prices for July showed a monthly increase of 0.5%, which is a sharper rise than the 0.2% increase that had been expected. Core consumer prices increased by 0.2%, as had been anticipated, however.

Sentiment among participants soured drastically with the release of the August Philadelphia Fed Survey, which dropped to -30.7. It had been expected to trend down to only 1.0 from 3.2 in the prior month.

Existing home sales for July fell to an annualized rate of 4.67 million, which is less than the rate of 4.87 million units that had been broadly expected. Existing home sales for the prior month were revised upward to reflect an annualized clip of 4.84 million.

Leading Indicators for July were the lone bright spot, but rarely do they have much of an impact on broad market trade, especially in the context of such widespread weakness. Nonetheless, they increased by 0.5%, which exceeds the 0.2% increase that had been anticipated.

While many investors and traders have been concerned about macro conditions for some time, underlying sentiment this session suggested that participants are turning more fearful. To little surprise, then, the Volatility Index, which is often euphemistically referred to as the Fear Gauge, surged more than 35% to trade back above 40.

Traders favored the safety of gold and Treasuries amid the action. That drove gold up 1.6% to $1822.00 per ounce after it set a new all-time high of almost $1830 per ounce, which was actually cleared after the close of pit trade. Among Treasuries, the benchmark 10-year Note also settled off of its high, but along the way its yield dropped to a record low just beneath 2.0%.

Share volume on the NYSE failed to crack 1 billion yesterday, but this session's dramatic swing lower pulled in droves of participants from the sidelines. In turn, about 1.6 billion shares were traded on the Big Board. About 97% of that was related to declining volume.

Concerns about capital levels at euro-zone banks dominated the markets today, spurring a flight to safety in the precious metals, while pressuring other commodities like crude oil and copper. Dec gold settled higher by 1.6% to $1822.00 per ounce. Futures traded to a new all-time high, at $1829.70, shortly after the open of equities and spent the remainder of the day chopping around just below that high. Sept silver, which finished up 0.9% to $40.69 per ounce, traded to its best levels in ten sessions, at $40.95, before pulling back and trading sideways for the remainder of the session.

Those concerns pressured Sept crude oil, which settled lower by 5.9% to $82.38 per barrel. Futures pushed lower throughout the session to notch lows at $81.66, its worst levels in a week, heading into the close. Sept natural gas settled lower by 1% to $3.89 per MMBtu, weighed on by this morning's inventory data which showed a slightly larger build than was expected.

Advancing Sectors: (None)
Declining Sectors: Utilities -1.3%, Consumer Staples -1.8%, Telecom -2.5%, Health Care -3.3%, Consumer Discretionary -5.0%, Financials -5.0%, Tech -5.3%, Industrials -5.7%, Energy -5.7%, Materials -5.8%DJ30 -419.63 NASDAQ -131.05 NQ100 -5.0% R2K -5.9% SP400 -5.5% SP500 -53.23 NASDAQ Adv/Vol/Dec 240/2.77 bln/2400 NYSE Adv/Vol/Dec 178/1.62 bln/2916