[BRIEFING.COM] Aggressive selling dropped the Dow more than 300 points before it began to fight back in afternoon action. Efforts to sell were largely debt driven.

Many market participants were put into a negative mindset with the technical breakdown last week. Their move to dump stocks came as Europe's bourses rolled over to resume their descent. Europe continues to wrestle with precarious financial conditions in both its periphery and its core -- Moody's even issued cautious comments about the outlook on France's debt rating. Traders were also agitated over the lack of progress made by U.S. officials in a recent attempt to arrange plans for shoring up fiscal conditions. The major equity averages were all down well in excess of 2% before stocks got any relief.

The market squeezed higher an afternoon trade right around the time that headlines indicated officials are moving forward on a plan to handle the U.S. deficit. Around the same time, Atlanta Fed President Lockhart was quoted for saying that he does not see risk of an outright recession, and that the risk of a recession stands at about 30%. Market participants may get more insight into the thinking of Fed members with the release of minutes from the most recent FOMC meeting tomorrow afternoon.

Although stocks were able to work their way up from session lows, the market never generated a great deal of momentum. That left stocks to still log sizable losses -- all 10 major sectors ended the day down 1% or more -- and give the S&P 500 its lowest close in more than a month.

Concerns about conditions in Europe and an aversion to risk prompted some to rotate into the dollar. As a result, the greenback gained ground against a basket of major foreign currencies. This morning the Dollar Index set a one-month high, but by session's end it was up a tame 0.3%.

Treasuries saw only limited interest amid the carnage, even after the latest auction of 2-year Notes saw very strong demand. The auction drew a bid-to-cover of 4.07, dollar demand of $142.5 billion, and an indirect bidder participation rate of 42.2%. Dollar demand was actually its strongest in more than 20 months.

Advancing Sectors: (None)
Declining Sectors: Telecom -1.1%, Utilities -1.2%, Consumer Staples -1.5%, Consumer Discretionary -1.5%, Materials -1.6%, Energy -1.7%, Health Care -1.9%, Tech -1.9%, Industrials -2.3%, Financials -2.5%

Source: Briefing