YAHOO [BRIFING.COM]: Sentiment turned decidedly negative today, resulting in the stock market's worst single-session loss in about two months.

The threat of contagion caused market participants to pare risk today. Efforts were spurred primarily by the continual climb in Italy's debt yields, indicative of dwindling confidence in the country's ability to get a grip on precarious macro conditions. Market pundits have already made it known that Italy's economy is far too large to be aided by a bailout.

Market participants also continue to await the announcement of Greece's new prime minister, who is hoped to lead the country's reform efforts.

Few stocks were spared from the sell-off. Financials fell especially sharply. Their 5% loss came as various banks and financial services firms were pommeled for fear of their exposure to Europe.

Making the beatdown suffered by bank stocks look modest, online jewelry retailer Blue Nile (NILE 32.82, -15.99) lost about a third of its market cap after as traders reacted to disappointing earnings, mixed guidance, and negative analyst commentary.

In addition to broad market weakness, General Motors (GM 22.31, -2.73) and Macy's (M 30.45, -1.71) were undone by weak forecasts, which overshadowed positive earnings surprises from the pair.

Best Buy (BBY 27.22, +0.38) was one bright spot. It settled with a gain of more than 1%, making it one of the best individual performers in the broad market.

In the presence of fear-driven selling, the Volatility Index surged more than 30%. Prior its surge today, the "Fear Gauge" had ended lower for five straight sessions.

The aggressive selling and surge in volatility drove many traders to seek safety in the dollar, which rallied 1.6% against a collection of major currencies. Most of the greenback's gain came against the euro, which tumbled 2.0% to $1.355, a one-month low.

To little surprise, Treasuries also attracted buyers. That sent the yield on the benchmark 10-year Note back below 2.0%. Strength in the 10-year Note was briefly challenged following relatively lackluster auction results this afternoon, but it eventually reclaimed its gains.

Crude oil settled lower by 1.1% at $95.74 per barrel. Futures rallied following this morning's inventory data, which showed a draw down versus expectations for a build. Despite trading into positive territory, and notching highs at $97.84, the continued weakness in equities and strength in the dollar proved too much for prices. Crude oil sold off back into negative territory to close at levels seen in overnight trade. Crude oil ended lower for the first time in six sessions. Natural gas ended lower by 2.4% at $3.65 per MMBtu. Futures put in session lows at $3.65 and chopped around those lows for a majority of the session.

It was a relatively quiet afternoon for precious metals. Gold prices shed 0.4% to close at $1791.60 per ounce, while silver prices ended down 2.2% at $34.36 per ounce. Both metals are adding to their losses in electronic trade.

Advancing Sectors: (None)
Declining Sectors: Telecom -1.9%, Utilities -2.2%, Consumer Staples -2.3%, Health Care -2.8%, Consumer Discretionary -3.6%, Tech -3.6%, Industrials -3.8%, Energy -4.3%, Materials -4.7%, Financials -5.4%DJ30 -389.24 NASDAQ -105.84 NQ100 -3.6% R2K -4.8% SP400 -4.3% SP500 -46.82 NASDAQ Adv/Vol/Dec 327/2.14 bln/2238 NYSE Adv/Vol/Dec 284/1.11 bln/2771