It was a tough day for stocks, with the Dow Jones Industrial Average (INDEX: ^DJI) falling 1.1%. But some names were crushed more than others. These three got hit the hardest.


Today's Stock-Price Change

Bank of America (NYSE: BAC) (3.6%)
Alcoa (NYSE: AA) (3.1%)
Caterpillar (NYSE: CAT) (2.4%)

Why, you ask, did shares of these three companies crater?

Positive economic news may have helped boost financial stocks last week, but since then it's been all downhill. Today we saw stocks with heavy exposure to Europe get torched. That means banks with big foreign operations, like Bank of America and Citigroup (NYSE: C). But Alcoa, Caterpillar, Cisco (Nasdaq: CSCO), and Chevron (NYSE: CVX), which are particularly sensitive to economic conditions, got caught up in the sell-off as well.

Where credit is due
Investors are fretting about the latest figures out of the European Central Bank, which shows a record high level of deposits from eurozone banks. That banks are parking so much of their cash with their central bank could suggest they are afraid to lend to each other, feel pessimistic about the economy, or are window-dressing their tattered balance sheets in preparation for end-of-the-year regulatory checkups. Whatever the case may be, the fact that they're playing it safe sure isn't a positive sign during a slow-moving credit crisis.

The news today wasn't all bad -- Italy managed to sell $13 billion of short-term debt at rates half that of last month's. That's absolutely incredible and a sign that the European Central Bank's strategy of lending huge amounts of money to Europe's banks in exchange for sovereign debt collateral has helped to stem the panic. But the crisis is far from over. It's unclear whether enough good collateral exists to cover all the loans banks will need, and you can never rule out economic shocks or renewed losses of confidence in Europe's banks.

Today, Bank of America, Alcoa, and Caterpillar got torched, once again highlighting how important it is to pick the right companies to succeed in today's shaky environment. If you're interested in one stock that our chief investment officer picked to crush the market in 2012, check out our brand new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. For a limited time, you can get instant access to the name of this company for free

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.