European default worries have sparked another wave of selling pressure across the global markets. A disappointing weekly jobless claim number further sapped investor confidence. Legal woes for Bank of America made headlines. The dollar's strength is crushing the commodities. Crude oil is down almost 5% near $73.25 a barrel. Gold futures are down more than 4% (-$46.40) to $1,065 an ounce.

Asian markets reversed as traders sold the recent bounce. Toyota continues to struggle after announcing the recall could cost $2 billion this quarter. Shares of TM hit new multi-month lows with today's 2.4% decline. Sony Corp announced earnings and reported its first profit in over a year. The Japanese NIKKEI lost 0.4%. The Chinese Shanghai fell 0.28%. The Hong Kong Hang Seng gave up 1.8% on relatively light volume.

Europe was in the spotlight today. The European Central Bank (ECB) and the Bank of England (BoE) both concluded their interest rate meetings. The ECB left rates unchanged at 1% for the ninth month in a row. The BoE left rates unchanged at 0.5%. There was no change in the BoE's 200 billion pound quantitative easing program.

The real story today was European credit default worries. The focus has been on Greece the last few weeks. ECB President Trichet offered some positive words for Greece's plan to tackle its budget problems. Unfortunately Portugal shocked the world. The country of Portugal tried to borrow 500 million euros last night and only managed to get 300 million. This is essentially a failed debt auction and illustrates how worried investors are that Portugal will not be able to keep their spending under control. Yields spreads and credit default swaps are soaring across Europe. Portugal, Spain, Ireland, Italy and Greece are the main worries.

The banking sector in Europe led the decline in stocks. Spain's stock market fell 5.9%. Portugal's fell 5.2%. The Greek market lost another 3.3%. The English FTSE lost 2.2%. The German DAX stumbled -2.4%. The French CAC-40 lost 2.75%.

Here at home in the U.S. investors were disappointed with the weekly initial jobless claim numbers. The trend has started to climb again. Last week the jobless claims came in worse than expected and this week was no different. Economists were expecting claims to drop to 455,000. Instead the Labor Department said initial claims rose from 472,000 to 480,000. This puts increased pressure on the non-farm payrolls report tomorrow morning. Analysts are hoping for a positive number. It seems most of the estimates are in the -5,000 to +15,000 jobs range.

The Labor Department also released Q4's productivity numbers, which came in at +6.2%. That was a little under expectations but the +6.2% jump lifted the full year productivity for 2009 to 2.9%. That's the biggest one-year gain since 2003. If you only look at the last nine months of 2009 it was the fastest pace since 1966. The good news here is that businesses usually push for more productivity from their current work force before hiring. This increase might suggest corporations are one step closer to hiring again.

In other news several major retail chains announced their same-store sales numbers. For the most part retail sales came in much better than expected. Unfortunately, this good news is completely overshadowed by the market's concern over Europe.

Currently the S&P 500 index is off 2.2% and hitting new relative lows near 1070. The next level of support looks like the 1050 area. The NASDAQ composite is off 2.4% and slipping past last week's lows. The Dow Industrials are down 2.1% and falling toward round-number support near the 10,000 level. The small cap Russell 2000 index is off 2.6% and breaking down under the 600 level. The Transportation index is hitting new relative lows. The banking indices are off about 3%. The energy sector is getting hammered (-3.3% to -4%) on the drop in oil prices. Mining stocks are really getting punished with the XAU down 5.5%.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

Scanning the OptionInvestor.com play list we're naturally seeing declines across most of our candidates. Believe it or not TEVA, a call play, is in positive territory. The VIX is seeing a bit move higher (+16%). INFY is off 3.78% and falling under its 100-dma. JPM is back under the $40 level and its 200-dma. The RTH appears to be breaking down from its bear-flag pattern. Shares of SI gapped open lower and hit our first target to take profits.