TIM PARADIS,AP Business Writer
NEW YORK – Stock traders are worried that what happens in Europe won’t stay in Europe.
Countries including Greece and Spain are being forced to make budget cuts because of soaring debts. Investors are concerned that this new frugality could slow not just the European economic recovery, but the global rebound as well. So they’re shrugging off signs of a sustained U.S. turnaround and are instead taking cues from developments abroad.
Investors are focusing some of their concern on the euro, the currency shared by 16 European countries. Sagging confidence in Europe’s ability to solve its economic problems has sent the euro plunging against the dollar. Investors believe that the dollar’s strength combined with weaker growth in Europe will reduce demand for U.S. exports and hurt the recovery that U.S. companies, particularly manufacturers, have been enjoying.
“Manufacturing has been doing very well. Exports have been doing very well. And if there is any fear that the global engine is going to slow, even at the margins, it creates uncertainty,” said Quincy Krosby, chief market strategist at Prudential Financial.