Concern about sovereign debt of some EU members roils markets
"This is a sovereign problem, and it's hitting everything," said Keith Springer of Capital Financial Advisory Services to Reuters. "If other European countries are having trouble like Greece, then it's a big problem for banks, and the banks are the foundation for everything. European banks will be in trouble and that will carry over to all stocks."
"The focus is shifting toward Spain and Portugal, where the deficit-reduction plans have been far less ambitious than Greece," said Kornelius Purps of UniCredit Markets & Investment Banking to Bloomberg.
Concerns in Portugal centered on political tension surrounding a regional spending bill. In Spain, the source of worry was reportedly because the government backed down from promised pension reform.
European Central Bank President Jean-Claude Trichet sought to ease investor fears, in part by noting that the deficit in the US is expected to hit 10% of GDP in 2010, compared with about 6% in the eurozone. He said that he was "confident" that Greece is moving in the right direction.
Trichet did admit that it is of "paramount importance" for Greece, Portugal and Spain to get their public finances under control.