NEW YORK - (AP) - The European debt crisis continued to weigh onfinancial markets Tuesday, sending the Standard and Poor's 500stock index near what many consider to be a bear market. The yieldon the 10-year Treasury note fell near a record low as investorspiled into lower-risk assets.
Stocks fell broadly as investors worried that Greece might beedging closer to default. European finance ministers suggested at ameeting Tuesday that holders of Greek debt may be required to takelarger losses than originally thought, which could hamper banksthat hold Greek debt and rattle global financial markets. Greecehas said it wouldn't be able to make budget cuts it had agreed toas part of a deal to receive emergency loans.
"Europe is the center point of all of this," said Paul Zemsky,head of asset allocation at ING Investment Management. "The bigfear in the market is that company earnings are not sustainable andthat Europe's problems are going to spread into the U.S. bankingsystem."
In testimony before Congress, Federal Reserve Chairman BenBernanke said the economy is weaker than the central bank expectedand that poor job growth continues to undercut consumer confidence.He warned Congress that deep spending cuts may impede a recovery.
Bernanke also said the central bank is prepared to take furtheraction to stimulate the economy. That could mean another round ofasset purchases, a tactic known as quantitative easing, noted DavidAder, chief government bond strategist at CRT Capital Group.