Fear that Spain may need a bailout sent its borrowing costs soaring, the euro to a two-year low against the dollar and stocks around the world tumbling as investors pulled back Monday from all manner of risk.
The French finance minister said Friday that Standard & Poor's had stripped the nation of its top-notch credit rating, again throwing Europe's ability to fight off its debt crisis into doubt.
Stocks closed sharply lower Monday after two big rating agencies criticized a fiscal pact between European leaders last week that is aimed at easing the region's debt crisis.
Stocks surged Thursday after another strong batch of earnings reports revived optimism about the economic recovery. Encouraging signs of growth in Europe added to the upbeat mood.