Why are investors in a tizzy on Thursday? Corporate earnings were good and the U.S. Labor Department reported decent weekly initial jobless claims, so you can't find blame there.
Instead, the selloff seems to be inspired by developments in Europe, where the central bank hit the panic button on Thursday, halting its rate hike campaign and employing a couple of anticrisis measures to prevent the debt crisis from spilling into Italy and Spain.
Those two heavily indebted countries have seen the yields on their government bonds spike in recent days, raising borrowing costs, creating difficulties at some banks and of course instilling concern among investors that the recent bailout of Greece had done little to contain a crisis that has weighed on global markets for well over a year.
On Thursday, the ECB resumed bond purchases of distressed euro-area bonds in an effort to bring yields back down, for the first time in five months. It also announced a plant to lend banks unlimited amounts of money to provide a jolt of liquidity to the market. This decision came a month ahead of a scheduled decision on the policy, underlining the central bank's haste to do something to soothe rattled markets.
The moves, however, appear to have had the opposite effect, especially with Switzerland and Japan making dramatic moves to lower the value of their respective currencies in response to the latest financial jitters and speculation among some observers that the U.S. Federal Reserve is about to provide another round of stimulus to the faltering U.S. economic recovery.
The carnage is clear in the stock market. In midday trading, the Dow Jones industrial average was down 332 points or 2.8 per cent, to 11,564. The broader S&P 500 was down 40 points or 3.1 per cent, to 1221. In Canada, the S&P/TSX composite index was down 430 points or 3.4 per cent, to 12,386.