A day after U.S. markets posted their worst losses since the financial crisis, world markets followed suit. As we explained, yesterday, two big things were on the minds of investors as the big sell-off took place: Worry about a U.S. economy that experts say can swing back into recession and worry that the European debt crisis is spreading to Italy and Spain.
The Guardian reports that the U.K.'s FTSE dropped more than 3.4 percent, while Japan's Nikkei was down 3.7 percent and Hong Kong's Seng dropped 5 percent.
Investors continued to pull funds away from stocks — including in emerging markets despite their solidly growing economies — and shifted instead into the perceived safety of assets like U.S. Treasury bonds, German bunds and precious metals.
Slowing manufacturing and service activity and the prospect of spending cuts to reduce debt loads and balance budgets are raising questions about where future growth will come from on both sides of the Atlantic.
Another big thing that has investors holding their breaths is that Washington will release new employment numbers later this morning. The AP reports, however, that the news will likely be gloomy:
Economists forecast that employers added only 90,000 jobs last month and that the unemployment rate was unchanged at 9.2 percent, according to a survey by FactSet.
That would mark an improvement over the 18,000 net jobs created in June — the fewest in nine months — and the 25,000 in May. But over time, 90,000 new jobs a month wouldn't even be enough to keep the unemployment rate from rising. Nor would it erase fears on Wall Street that the U.S. may be on the verge of another recession.