Global Stocks Get Crunched

Across the board, traders’ screens were flickering red yesterday as global equities markets took significant hits at the hands of the ongoing European debt crisis.

In Europe, the carnage was broad based as the Stoxx 50 shed 2.6%, the FTSE 100 declined 1.1% and the DAX dropped 2.1%.

For Europe exchange traded funds, results were similar as iShares MSCI Germany Index ETF (NYSEARCA:EWG) lost 2.8%, iShares MSCI Italy Index (NYSEARCA:EWI) declined 4.96% and iShares MSCI Spain Index (NYSEARCA:EWP) fell 4.97%.

At home, the Dow Jones Industrial Average (NYSEARCA:DIA) gave up 138 points, 1.1%, to close at 12,502, while the S&P 500 (NYSEARCA:SPY) dropped 1.6% and the Nasdaq Composite fell 1.95%.

All of the heartburn came from Europe and declining hopes for any breakthroughs at this week’s upcoming European summit meeting in Brussels.

As if Greece, Spain and Italy weren’t causing enough problems already, Cyprus joined in with a request for financial aid as the country needs to dig up 1.8 billion Eurodollars, approximately 10% GDP, to recapitalize one of its big banks, Cyprus Popular Bank.

It was a bad day for the European Union as Spain came with hat in hand this morning, begging for aid to recapitalize its banks, as well.

The only spot of good news was that new home sales hit the highest level in May since this time in 2010, rising 7.6%.

Finally, Moody’s cut its ratings on 28 Spanish banks, with some of them reaching junk status.

Bottom line: Global markets grew increasingly nervous today over deepening dangers in Europe and the inability of leaders to get in front of the seemingly never ending crisis. Expect more volatility ahead as we approach this week’s pivotal summit.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.