Economic Fears Hit Global Markets

At Wall Street Journal (Google link here):

Worries about the global economy rippled through financial markets on Tuesday, driving down share prices from Tokyo to New York and placing new strains on Spanish and Italian bonds.

Concerns that have been building for days erupted into a selloff that began in Asia, gathered steam in Europe and culminated in a sharp, late-day drop in New York. As the dust settled from the acrimonious debate in Washington over the debt ceiling, investors turned their attention to mounting evidence that the global economy is weakening. Data in recent weeks has shown that the economic "soft-patch" seen around the world in the second quarter is proving deeper and more entrenched than many investors had thought would be the case.

"As people take their focus off the debt ceiling…they're focusing on an economy that looks worse than they had thought," said Erik Weisman, a portfolio manager at MFS Investment Management.

U.S. stocks fell for the eighth straight day, the longest stretch of declines since the 2008 financial crisis. Several measures fell into negative territory for 2011. The Dow Jones Industrial Average dropped below 12000, plunging 265.87 points, or 2.2%, to 11866.62. In its eight-day decline, the blue-chip index is down 6.7%. In Europe, Italian and Spanish bond markets continued their decline, sending yields to euro-era highs. European bank stocks, too, also suffered sharp losses and broader stock indexes tumbled.

Government dependence on borrowing is hammering investor confidence and rattling markets.