World Financial Markets Sharply Lower

20 May 2010

A trader watches a screen at Madrid's Stock Exchange. European stocks have steadied despite a plunge in Asian markets. Investors worry that Greece's debt crisis could spread, 6 May 2010.

A triple-dose of economic worries sent global financial markets sharply lower Thursday. There are mounting concerns about Europe's debt situation and signals of U.S. economic weakness triggered a sell-off of shares on both sides of the Atlantic, following earlier losses in Asia.

For weeks, the Greek debt crisis has taxed investor optimism while sapping strength from the Euro. The global downward market trend accelerated Thursday with two economic reports that cast doubt on the sustained vitality of the U.S. economic recovery.

First, the Labor Department reported a spike in the number of Americans filing for jobless benefits. The number of newly-laid off workers jumped unexpectedly to 471,000 last week, 25,000 more than the previous week. PNC Financial chief economist Stuart Hoffman says the data point to continued layoffs and weak job creation in the United States.

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"What you want to see over time is this number move not only below 450 [thousand], but below 400,000 before the economy is generating the strong job gains that we would all like to see.

Economists have long assumed that job creation would lag behind overall improvement of economic conditions in the United States. But another report has cast doubt on the second part of that assumption. After rising steadily for more than a year, the index of leading economic indicators actually slipped by .1 percent in April, according to a private research group. Six of 10 components of the index deteriorated, including new home permit applications, jobless claims, and factory materials deliveries.