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Global Stock Sell Off Continues

Worry about slowing economic growth and a new bout of credit fears ignited the global sell off in stocks which continues into the U.S. open. Wall Street was the first market to spiral downward in Friday's big sell off amid worries the U.S. sub prime mess will take longer to sweep away than expected and is fanning out into other types of credits. U.S. stocks were also impacted by warnings of slower growth, apparent in some big earnings reports, including Caterpillar .

Stocks around the world are sharply lower. Japan tumbled 2.24%, South Korea lost 3.3%, the Hong Kong market was off 3.7% and even the hot, gravity defying Shanghai stock market lost 2.6%. European stocks are all lower. London's FTSE is down about 1.4%, the German DAX is off 1.3% and the French CAC 40 was down about 1.7%.

Running for Cover
The U.S. dollar, in volatile trading, is firmer against most currencies as it becomes a safe haven currency in a reversal of its recent role. Yet, it hit a new low against the euro overnight and remains weaker against the yen. Gold is falling and is down more than 2% in early U.S. trading.

Bummer Banks
Fear in the credit markets accelerated last week when investors got a good look at bank earnings reports. The writedowns and warnings from the sector added to concerns that the housing slowdown will continue to cause problems and the credit markets are a potential mine field of trouble. Not surprising, the bank index has been down for the last eight trading days. If it is down again today it would be the longest losing streak since that index was launched in 1993, according to Jason Roney of Sharmac Capital.

"Watch the financials...until we see some stabilization in the financial stocks, you'll continue to see the risk aversion trade," Roney said.

Leaky SIVs
Jitters in the credit markets continue. This time last week, news of the superfund for toxic structured investment vehicles (SIV) debt was just making the rounds. Today, it's still the topic of talk and is drawing criticism. The Financial Times reports a committee of international bankers warned that the fund must be transparent in its pricing of assets if it hopes to win investor confidence.

Bear Finally Finds a Partner
After weeks of speculation, China's CITIC Securities announced it will invest $1 billion in Bear Stearns and receive 40-year trust securities that convert into about six percent of Bear's equity. Bear Stearns, in return, will buy $1 billion in CITIC debt that would equal a two percent stake in the firm.

Lehman downgraded the mortgage finance sector to negative from neutral and reduced specialty finance to neutral from positive. American Express , which reports after the bell, was one of the stocks the firm cut in the specialty finance group. Countrywide and Washington Mutual were put at underweight from equal weight. Better late than never.

Oil Pressure Lifts
Oil is weakening this morning as worries about a slowing economy take the forefront. The November crude futures contract expires today and trading could be volatile. Iran today says it will not abandon its nuclear plans regardless of sanctions, its government says in a letter to the French foreign minister.

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Senior Commodities Correspondent and Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.