The market loves a quick solution, and we're obviously not getting one," said Mark Lehmann, director of equities of JMP Securities.Christian Louboutin Boots
The slide in stocks was broad: Only a single stock in the Standard & Poor's 500, Best Buy, finished higher for the day. Financial companies were among the hardest hit because they would suffer first if Europe's debt problem spins out of control.Christian Louboutin Boots
Morgan Stanley stock plunged 8 percent and Goldman Sachs 7 percent. In regulatory filings last week, Morgan Stanley reported it had $1.8 billion in liabilities related to Italy, and Goldman said it had $28 billion related to all of Europe.Christian Louboutin Boots
Markets fear that a chaotic default by Greece would lead to huge losses for European banks. That could cause a global lending freeze similar to what happened after the investment house Lehman Brothers fell in 2008.Christian Louboutin Boots
In Italy, where the crisis is only beginning, the country's borrowing rate has skyrocketed to a level that is widely considered to be unsustainable. The higher rates will make it far more difficult and expensive for Italy to roll over its debts. It has over $400 billion to raise in 2012 alone. Italy's total economy is about $2 trillion.Christian Louboutin Boots
The 389-point decline for the Dow was the worst since Sept. 22. The S&P 500 closed down 46.82 points at 1,229.10. The S&P, the broadest major stock index, declined 3.7 percent, its worst day since Aug. 18.Christian Louboutin Boots
Over the summer, swings of 3 or 4 percent a day for the stock market were common. Investors were focused on a debt showdown in Washington and fear of a second recession.Christian Louboutin Boots
Lately, Europe has pushed everything else to the back burner, and the volatility has continued. Last week, the Dow fell 276 points Monday and 297 points Tuesday, both because of instability in Europe. It rose 100 or more three of the next five days.
The Nasdaq composite index finished Wednesday down 105.84, or 3.9 percent, at 2,621.65.Christian Louboutin Boots
European stock markets fell sharply, too. The main stock index in Italy finished the day down 3.8 percent. The DAX index in Germany and the CAC-40 in France each declined 2.2 percent.Christian Louboutin Boots
In the United States, prices rose for assets seen by investors as reasonably safe. The dollar rose 1.6 percent against the euro, a reflection of the instability in the 17 nations that use the euro.Christian Louboutin Boots
The yield on the 10-year Treasury note fell to 1.96 percent from 2.08 percent Tuesday, a steep drop. Falling Treasury yields are a sign of rising bond prices, both indications that investors feel safe buying American debt.
In Italy, the yield on the benchmark government bond blew past 7 percent. That was considered an important level because Greece, Portugal and Ireland required bailouts from other nations when their bond yields hit 7 percent.Christian Louboutin Boots
Italy is of more concern because it has the third-largest economy in Europe — more than twice as big as Greece, Portugal and Ireland combined. And its debt, $2.6 trillion, is too large for other European countries to erase.
Italian Premier Silvio Berlusconi promised late Tuesday to step aside after a new budget is passed, but there are concerns that the transition will be difficult. Markets see Berlusconi as an impediment to far-reaching economic reforms.Christian Louboutin Boots
The benchmark Italian bond rate spiked to 7.4 percent, a startling increase of 0.82 percent point from the day before. It settled down later in the day, to 7.26 percent.Christian Louboutin Boots
In Greece, Prime Minister George Papandreou told the nation that the political parties were joining together to save it from going broke. Then power-sharing talks broke down, and political leaders failed to name a new prime minister.
Papandreou threw world markets into turmoil last week when he stunned European leaders by announcing he would put a hard-fought bailout deal for Greece up for a popular vote. He later backed off that plan and announced he would step aside