Confidence in the strength of the global economy is wavering Friday amidst new signs of an economic slowdown. Now investors are heading for the exits.
In the second biggest stock market drop this year, the Dow Jones industrial average lost 251 points Thursday after new reports from the United States and China showing a big slowdown in manufacturing.
Not only is manufacturing slowing down, unemployment figures are at their highest level in nine months, and sales of previously owned homes are falling.
The dismal development comes only days after the Federal Reserve slashed its estimates for U.S. economic growth, promising action by the Feds if the economy slows any further.
"We're prepared to take further steps, if necessary, to promote sustainable growth and recovery in the labor market," Federal Reserve Chairman Ben Bernanke said.
World markets reflected the news Friday, with Asian markets showing a steep decline one day after the Dow's 2 percent drop.
As if all that weren't enough, Moody's Investors Service reported late Thursday it has lowered the credit ratings on 15 major banks. That includes some of the world's largest banks like Bank of America, JPMorgan Chase, Citigroup, and Goldman Sachs.
Moody's believes the banks' long-term prospects for profitability and growth are shrinking.
"They deserve it for years of mismanagement and speculative trading activities," Francis Lun, with Lyncean Holdings, said. "As a result, all these major international banks are being downgraded to the more realistic level."
The downgrade adds to the questions being raised about the banks' ability to withstand the debt crisis in Europe.
But analysts say there will not be a repeat of the 2008 financial crisis and these banks are not on the verge of going out of business.
Relief at the Pump
The only good news appears to be at the pump. The cost of oil is now under $80 a barrel, and some experts say it could fall all the way to $70 a barrel.
That would bring gas prices down closer to $3 a gallon, acting almost as a tax cut for consumers.
Meanwhile, experts say the best outcome at this point may be for the economy to just stay the way it is: weak and sluggish, but not getting any worse.