A day that started with equity futures pointing lower got far worse in the last hour and finished with big declines for U.S. stocks after Fitch Ratings said Europe's sovereign debt contagion represents ''serious risk'' to American banks. That was enough to punish financial shares and nearly every other sector under the sun and led all three major U.S. indexes to losses of over 1.5%.

Stats Table

Europe's sovereign debt fiasco continues to play a heavy hand in global equity markets and that makes for tough sledding for most investors. It is especially painful for those playing U.S. stocks, which have held up well compared to most global markets, because economic data points here in the States have been decent recently.

In economic news released today, U.S. industrial output rose 0.7% in October, according to the Federal Reserve. That is good for the biggest jump since July and easily beat the 0.4% increase economists expected.

Consumer prices dipped 0.1% last month, according to the Labor Department. Excluding food and energy prices, the consumer price index increased 0.1%, the same increase seen in September. Economists expected no change in the October CPI reading.

Despite all the consternation and negative headlines out of Europe, crude oil enjoyed a solid day, jumping over $100 a barrel to its highest levels in five months. News that Enbridge Inc. (ENB) will pay $2 billion for ConocoPhillips' (COP) stake in the Seaway pipeline was one bright spot in the energy sector today and oil moved higher despite the Energy Department saying inventories at Cushing rose 890,000 barrels to 32 million last week.

Analysts surveyed by Bloomberg were expecting a decline of 1.2 million barrels. Still, oil bulls should take heart that their commodity of choice put in such a bullish performance on a day when the opposite easily could have been the case.

Oil Chart

Getting back to Europe, it should be noted the Dow was down less than 40 points at around 3PM New York time. Then came the Fitch report regarding U.S. banks' exposure to the Europe debacle and the rest is history. While the ratings agency did say the dollar amount in terms of European exposure by U.S. banks is ''manageable,'' it added the top five U.S. banks have a total of $114 billion in loans, deposits and other assets tied to French banks, the Associated Press reported.

Indeed, $114 billion in French exposure is manageable. Hey, that is almost $6 billion LESS than the market cap of JPMorgan Chase (JPM). Still, the Fitch report provided a predictable result and that was intense late-day damage on the financial services sector. And for those keeping track of French bonds, the yield on French 10-years was 3.69% today, almost 50% increase from early October and various press reports are saying investors are starting to fret France might join in the U.S. in losing the prestigious AAA credit rating.

XLF Chart

I never like being Debbie Downer, but there is a fair chance that the situation across the Atlantic is going to get worse before it gets better. If you did not see the Bloomberg Television interview with Citigroup Willem Buiter, I encourage you to just put his name into your search engine of choice and watch it.

If you do not have the time, I will give you one of the more important lines from the interview: ''Time is running out fast.  I think we have maybe a few months -- it could be weeks, it could be days -- before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it. So they have to act now.''

As I've said here numerous times in the past, Italy and Spain are much different ballgames than Greece or Portugal for the simple reason that the first pair's economies are far larger than Greece and Portugal. I have been showing charts of the iShares MSCI Italy Index Fund (EWI) for a while now, so I thought it would be interesting to change things up a bit and a look at the iShares MSCI Spain Index (EWP). Sure, Wednesday's decline was of the light volume variety, as you can see, this is a nasty looking chart.

Spain ETF Chart

Speaking of ugly charts, there is Abercrombie & Fitch (ANF), a company I will admit to having been less than kind to in the past. I have been more opposed to the style or lack thereof in Abercrombie clothes, but it looks like the object of my discontent should have been the stock itself. Shares of Abercrombie plunged almost 14% today on volume that was more than seven times the daily average.

The culprit was a weak third-quarter earnings report and downbeat fourth-quarter guidance. Abercrombie said its third-quarter profit rose to $50.9 million, or 57 cents per share, from $50 million, or 56 cents per share, a year earlier. Revenue increased almost 22% to $1.08 billion. Analysts expected a profit of 72 cents on sales of $1.07 billion.

The company added gross margins fell 360 basis points to 60.1%. Maybe Abercrombie will be able to raise prices next year, but that is a big ''maybe.'' Or maybe the reason the company had to keep prices low in the third quarter is because consumers are realizing other stores sell the same stuff Abercrombie does at better prices.

ANF Chart

In after-hours news, data storage provider NetApp (NTAP) was getting walloped, down almost 7% as of this writing after the company reported a fiscal second-quarter profit of $165.6 million, or 44 cents a share, on revenue of $1.51 billion, compared with earnings of $175.4 million, or 45 cents a share, on $1.25 billion in revenue a year earlier. On an adjusted basis, NTAP earned $235.5 million, or 63 cents. Wall Street was expecting a profit of 60 cents a share on $1.55 billion in revenue.

NTAP, a name that has been tossed around more than a few times in the past as a potential takeover target, issued some dour guidance. The company forecast an adjusted third-quarter profit of 36-40 cents a share on sales of $1.52-$1.61 billion. Analysts were expecting a profit of 63 cents a share on $1.65 billion.

NetApp Chart

Looking at the charts, there is more bad news about today's decline, as if we needed more. Support for the S&P 500 was 1240 heading into the day, but the index closed a few points below that area. Next support is 1225 and from there we could go to 1200. If the market can bounce from here, the S&P 500 would need to take out 1255 and then 1275 to have buyers feeling happy again.

S&P 500 Chart

There is a similar situation with the Dow Jones Industrial Average. The 12,000 area was important support that was violated today as 29 of the 30 Dow stocks closed in the red. MMM was the best performer of the lot and that stock was merely unchanged. PG was the next best performer with a drop of 0.44%. A drop below 11,600 would be bearish. Upside resistance after 12,000 can be found at 12,175 and 12,285.

Dow Chart

Looking at the Nasdaq, GMCR had a very nice day, but aside from that name, few others did. AAPL, AMZN, GOOG and PCLN were all lower and that sent the Nasdaq well below its 200-day moving average. Now the 2687 area is resistance with support found at 2600. A drop below 2600 means accelerated selling a possible decline below 2575.

Nasdaq Chart

The combination of the looming Super Committee deadline and Europe's ongoing trials and tribulations makes this a tricky time to be long. Small-caps are not doing much to illicit confidence and correlations are a real pain in the neck. XLU, one of the main utilities ETFs, has lagged the S&P 500 over the past five trading days while GLD and XLP, the largest staples ETF, have barely outperformed the S&P 500. Greenbacks anyone?

Todd Shriber