The Dow Jones Industrial Average fell briefly below 10,000 points Tuesday on fears that the European debt crisis could hamper a global recovery. Analysts say concerns about the falling euro and cost cutting measures by eurozone countries also are being complicated by political tensions in other parts of the world.
World markets continue their downward spiral as investors try to gauge the direction of the global economy.
After a bullish start this year, a wave of pessimism appears to be taking root. "Right now I think there is still a concern that European countries are acting unilaterally. They are not working in a coordinated fashion, but certainly they have got [gotten] the message that if they don't do something soon, then the turmoil that we are seeing in Greece could easily spread to other countries and that it will be harder to turn around," said Sam Stovall, an investment strategist with Standard and Poor's.
The Bank of Spain's recent take over of southern-based Cajasur bank only adds to European concerns.
Investors also worry that steep spending cuts enacted by some eurozone countries could stifle recovery.
In Brussels Tuesday, European Commission President Jose Manuel Barroso called for a unified response. "Markets are asking Europeans to work better together and to act together in a coordinated manner. I hope that message is well understood," he said.
Political tensions on the Korean peninsula add to market pessimism.
"F-E-A-R for Financial reform, Energy woes, Asian tensions and Recessionary concerns. That basically means investors are worried that we are probably going to be going into a double dip scenario because of the sovereign debt crisis that is occurring in Europe," said Stovall.
A "double dip' scenario refers to a short-lived recovery, followed by another recession.
Despite following earlier declines in Asia and Europe, the Dow Jones Industrial index managed to trim losses to close above 10,000 points late Tuesday.
