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Stocks Plunge, Then Recover As Debt Worries Slam Markets

In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points on worries about the spreading European debt crisis before paring those losses in an equally rapid rebound.

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The euro fell further against the dollar, hitting a new 14-month low. The euro has tumbled against the dollar since last fall as faith in Europe's shared currency dwindles. Greece's debt crunch is widely seen as a test of Europe's ability to restore fiscal discipline to the weak economies in its union and keep the decade-old currency viable.

"It's going to drop further," Tim Speiss, chairman of the personal wealth advisers practice at Eisner LLP in New York, said of the euro.

The dollar's rise pushed commodities prices lower, especially oil. That sent prices of oil companies like ExxonMobil and Chevron lower.

Greece passed a bill in its Parliament after heated debate that calls for unpopular cuts in public spending in pensions and other areas, as well as tax increases. Greece needed to approve the austerity measures to be eligible to receive a $141.9 billion aid package from the International Monetary Fund and the 15 other countries that use the euro.

Greece needs access to an initial portion of the money by May 19 to cover $11.6 billion in debt payments, or it likely will default.

Even if Greece gets the money, there are still worries that the loans would be only a temporary fix to a growing debt problem across the continent. Portugal and Spain have also seen their debt ratings downgraded.

In economic news, the Labor Department said new claims for jobless benefits fell lass than expected last week. It also said productivity rose more than forecast in the first quarter, but that was due in part to a drop in labor costs, which is a negative signal for consumer spending. The report comes a day ahead of the government's April jobs report. It is widely seen as the most important economic report.

Treasury prices rose, pushing interest rates down in the bond market. The yield on the benchmark 10-year Treasury note fell to 3.41 percent from 3.54 percent late Wednesday.