Marcelo Del Pozo / Reuters

In Spain, which sank back into recession in the first quarter, the unemployment rate hit 24.1 percent in March, a level not seen in eurozone data stretching back to 1986.

Europe's two-year-old strategy of austerity isn't working. And there is no Plan B.

The latest evidence that government spending cuts are driving the eurozone deeper into recession came Wednesday with a report on soaring unemployment in the zone's weaker economies.

Overall unemployment hit a 15-year high of 10.9 percent in March, driven by layoffs in Italy and Spain, a tenth of a point higher than in February, according to Eurostat, the European Union's statistics office. That level of joblessness hasn't been seen since 1997, before the euro was introduced to world financial markets.

The average rate masks painfully high levels of unemployment in the hardest-hit countries. In Spain, which sank back into recession in the first quarter, the unemployment rate hit 24.1 percent in March, a level not seen in eurozone data stretching back to 1986. In Greece, more than one in five are out of work. In both countries, half of those under 25 are out of a job.

With deep government spending cuts only beginning, economists believe the jobless rate in Europe is headed higher.

"It now looks odds-on that the eurozone unemployment rate will move appreciably above 11.0 percent over the coming months with an ever-growing danger that it will reach 11.5 percent," said Howard Archer, economist at IHS Global Insight. 

The recession has also begun to take a toll on Germany, the flywheel of Europe's economy and the driving force in the austerity measures imposed on debt-burdened countries with the weakest economies.

German unemployment ticked up last month for only the second time in 25 months, as other economic indicators showed the country's manufacturing sector contracting.

"This is a negative surprise," said Heinrich Bayer, an economist at Postbank. "Economic weakness seems to be taking a toll after all.... We are in a phase of stagnation."

European politicians and bankers have spent the past two years cobbling together a series of plans to force budget cuts on debt-burdened countries, including Greece, Italy and Spain, in return for a financial lifeline. Those efforts initially focused on Greece, which ultimately defaulted on a portion of its debt.

Now, other countries appear to be entering the downward spiral, as spending cuts force layoffs and undermine consumer and business confidence, driving local economies deeper into recession. As those local economies shrink, so do tax revenues - forcing deeper budget cuts and increasing the government's debt burden in relation to the size of its economy.

The leaders who backed those austerity measures now face voters at the polls.

"People - voters - are making it clear to politicians that they are tired of losing prosperity," said Carl Weinberg, chief economist at High Frequency Economics. "You can see that in the latest polls and surveys. It will be clear in national election results in Greece and France this weekend. Austerity is out: renewed economic growth is in."

Given the halting progress made by European leaders over the past two years, though, it remains far from clear whether they can agree on   how to shift course and promote growth.

The recession has weakened an already shaky banking system, which is operating on life support from Europe's central bank. Much of that funding, though, is being channeled back into purchases of government debt floated to fill in deficits. As demand from private investors dries up, banks have become the lenders of last resort to their governments..

That's made it harder for private companies to get the credit they need to expand operations and hire more workers.  

"We're not getting reforms anywhere in Europe," said Steen Jakobsen, chief economist at Saxo Bank. "The access to credit is not there because the governments continue to take a bigger slice of the credit cake. That is the problem."

By msnbc.com news services

Despite a morning swoon, stocks ended higher Tuesday, in part buoyed by a report that said consumer spending increased more than expected in October.

According to preliminary calculations, the Dow Jones Industrial Average was up 17.18 or 0.14 percent, to 12,096.16. The S&P 500 rose 6.03, or 0.48 percent to 1,257.80. The Nasdaq added 28.98, or 1.09 percent, to end at 2,686.98.

Americans spent at a decent clip last month, driving U.S. retail sales up 0.5 percent in October amid gains in demand for autos and electronics.

The Commerce Department said U.S. retail sales rose more than expected as strong receipts from motor vehicle and building material dealers offset the drag from service stations, suggesting the economy started the fourth quarter with some vigor.

Walmart’s third-quarter profit dipped, missing analysts’ forecasts. But the world’s largest retailer had its first quarterly revenue gain in more than two years. The report is a positive sign in the midst of otherwise bad economic news. Wal-Mart's core low-income shoppers have been particularly hard hit by joblessness and the other challenges of the weak economy. But the latest quarter indicates that they may be more willing to spend.

European debt issues continued to hang over the market. Higher interest rates on government debt issued by Italy, Spain and other European countries rattled stock markets in Europe early Tuesday.

The market rate for Italy's 10-year bond jumped back above 7 percent. When rates crossed the 7 percent threshold last week, it raised worries about the country's ability to manage its debts. Greece, Ireland and Portugal were forced to seek financial lifelines when their borrowing rates crossed the same mark.

CNBC's Seema Mody & Sharon Epperson discuss the day's major market action.

Previously: Stocks higher entering midafternoon in seesaw day

Associated Press contributed to this report.

By msnbc.com news services

Stocks nudged higher Tuesday as investors had to balance good news about the U.S. economy against persistent worries that the eurozone may not be able to get its act together about its debt issues.

Approaching 1 p.m. Eastern, the Dow Jones Industrial Average was up 0.33 percent. The S&P 500 rose 0.35 percent. The Nasdaq added 0.65 percent.

Higher interest rates on government debt issued by Italy, Spain and other European countries rattled stock markets in Europe early Tuesday. The market rate for Italy's 10-year bond jumped back above 7 percent. When rates crossed the 7 percent threshold last week, it raised worries about the country's ability to manage its debts. Greece, Ireland and Portugal were forced to seek financial lifelines when their borrowing rates crossed the same mark.

Americans spent at a decent clip last month, driving U.S. retail sales up 0.5 percent in October amid gains in demand for autos and electronics.

The Commerce Department said U.S. retail sales rose more than expected as strong receipts from motor vehicle and building material dealers offset the drag from service stations, suggesting the economy started the fourth quarter with some vigor.

Walmart’s third-quarter profit dipped, missing analysts’ forecasts. But the world’s largest retailer had its first quarterly revenue gain in more than two years. The report is a positive sign in the midst of otherwise bad economic news. Wal-Mart's core low-income shoppers have been particularly hard hit by joblessness and the other challenges of the weak economy. But the latest quarter indicates that they may be more willing to spend.

Brian Kelly, of Shelter Harbor Capital; CNBC's Simon Hobbs, and Charles Evans, president of the Federal Reserve Bank of Chicago discuss Europe and other pressures weighing on the market today.

Previously: Wall Street wavers amid fears about Europe

Associated Press contributed to this report.

By msnbc.com news services

Stocks fell right after the opening bell and lower Monday, as costs for Italy’s and Spain’s governments to borrow rose, signaling that the eurozone still has much work to do to handle its debt issues.

According to preliminary calculations, the Dow Jones Industrial Average was off 74.62, or 0.61 percent, to 12,079.06. The S&P 500 fell 11.94, or 0.94 percent, to 1,251.91. The Nasdaq ended down 21.53, or 0.80, to 2,657.22.

Italy managed to sell five-year bonds to investors and raise $4.1 billion on Monday. But the 6.29 percent interest rate was the highest since 1997. Spain’s rate moved above 6 percent.

Worrying signs about Europe reemerged Monday. Italy's largest bank, Unicredit, reported a $14.4 billion quarterly loss. Also, the Italian government raised $4.1 billion in a sale of five-year bonds, but the 6.29 percent interest rate was the highest since 1997. Italy paid a much lower rate of 5.32 percent at a similar auction last month. The increase is a sign that investors are still worried about Italy's ability to service its debt and cut back its bloated budget.

"The problems these countries are dealing with go well beyond their prime ministers," said Dan Greenhaus, chief global strategist at the brokerage BTIG. "Italy didn't get where it is in five minutes. And it's not going to get out of where it is in five minutes. This is going to take months."

The New York Times noted some cause for optimism though.

Jeffrey D. Saut, chief investment strategist at Raymond James in St. Petersburg, Fla., noted that for the 445 of the S.& P. 500 companies that had reported results through Thursday, profits were up 22 percent from a year earlier, while revenues were up almost 12 percent.

Selling on Wall Street is unlikely to go very far “because earnings are just too good,” he said. Assuming the United States does not dip into recession, “I think you’ll see people outside of the United States shoveling money into stocks in this country.”

Retailers are reporting quarterly earnings. Lowe's Cos. posted profits that were below Wall Street's estimates, pulled down by charges tied to store closings and unfinished projects. The home-improvement retailer's stock dropped on the news.

J.C. Penney Co.'s stock also fell after it reported a quarterly loss early Monday. The department store operator said its results were weighed down by restructuring costs and it lowered its earnings outlook for the rest of the year.

IBM was up nearly 1 percent after the investor Warren Buffett said his firm has been buying the company's stock this year. The purchases have given Berkshire Hathaway Inc. a stake of more than 5 percent in IBM. Berkshire will file a full quarterly update on its holdings Monday afternoon.

No major economic reports came out Monday.

Steven Wieting, Citigroup economist, discusses the remaining risks Europe has for the U.S. economy and markets with CNBC.

Previously: Stocks continue lower in midday trading

The Associated Press contributed to this report.

By msnbc.com news services

Stocks traded near their session lows Monday, as costs for Italy’s and Spain’s governments to borrow rose, signaling that the euro zone still has much work to do to handle its debt issues.

Approaching 1:30 Eastern, the Dow Jones industrial average was off 0.76 percent. The S&P 500 was 1.09 lower. The Nasdaq had fallen 0.86 percent.

Italy managed to sell five-year bonds to investors and raise $4.1 billion on Monday. But the 6.29 percent interest rate was the highest since 1997. Spain’s rate moved above 6 percent.

The New York Times noted some cause for optimism though.

Jeffrey D. Saut, chief investment strategist at Raymond James in St. Petersburg, Fla., noted that for the 445 of the S.& P. 500 companies that had reported results through Thursday, profits were up 22 percent from a year earlier, while revenues were up almost 12 percent.

Selling on Wall Street is unlikely to go very far “because earnings are just too good,” he said. Assuming the United States does not dip into recession, “I think you’ll see people outside of the United States shoveling money into stocks in this country.”

Retailers are reporting quarterly earnings. Lowe's Cos. posted profits that were below Wall Street's estimates, pulled down by charges tied to store closings and unfinished projects. The home-improvement retailer's stock dropped on the news.

J.C. Penney Co.'s stock also fell after it reported a quarterly loss early Monday. The department store operator said its results were weighed down by restructuring costs and it lowered its earnings outlook for the rest of the year.

IBM was up nearly 1 percent after the investor Warren Buffett said his firm has been buying the company's stock this year. The purchases have given Berkshire Hathaway Inc. a stake of more than 5 percent in IBM. Berkshire will file a full quarterly update on its holdings Monday afternoon.

No major economic reports are due out Monday.

CNBC's Michelle Caruso-Cabrera leads a discussion on Italy's and Spain's effect on U.S. markets.

Previously: Wall Street opens lower amid earnings, euro news

By msnbc.com staff and news services

Hopeful signs in both U.S. employment and Europe’s debt crisis helped stocks end up Thursday, a day after a massive drop.

According to preliminary calculations, the Dow Jones industrial average was up 113.07 or  0.96 percent, to 11,894.01. The S&P 500 rose 10.59, or 0.86 percent, to 1,239.69. The Nasdaq ended 3.50 higher, or 0.13 percent, to 2,625.15.

The Labor Department said Thursday that new claims for unemployment benefits dropped 10,000 to a seasonally adjusted 390,000 versus a revised 400,000 the prior week. Analysts had been expecting claims of about 400,000, Reuters said.

Italy sold $6.8 billion worth of debt at rates that were more favorable than analysts expected. Italy's benchmark borrowing rate dropped below 7 percent after spiking above that level the day before. Investors were also relieved by talk that the economist Mario Monti is likely to replace Premier Silvio Berlusconi, who was seen as an obstacle to meaningful economic reforms. Italy's president pledged that Berlusconi will step down soon.

Worries about what Italy’s debt issues could mean for the global economy helped send stocks plunging Wednesday. The Dow ended down 389.24 points.

Peter Cardillo, chief market economist at Rockwell Global Capital, called the drop in unemployment claims and the news from Europe encouraging. "It's got the markets on the cheerful side," he told the Associated Press.

By msnbc.com staff and news services

Hopeful signs in both U.S. employment and Europe’s debt crisis helped stocks turn positive in afternoon trading. Headed into the last hour of the session stocks were off session highs but still up.

Approaching 3 p.m. Eastern, the Dow Jones Industrial Average was up 0.99 percent, the S&P 500 rose 0.84 percent and the Nasdaq was 0.15 percent higher.

The Labor Department said Thursday that new claims for unemployment benefits dropped 10,000 to a seasonally adjusted 390,000 versus a revised 400,000 the prior week. Analysts had been expecting claims of about 400,000, Reuters said.

Italy sold $6.8 billion worth of debt at rates that were more favorable than analysts expected. Italy's benchmark borrowing rate dropped below 7 percent after spiking above that level the day before. Investors were also relieved by talk that the economist Mario Monti is likely to replace Premier Silvio Berlusconi, who was seen as an obstacle to meaningful economic reforms. Italy's president pledged that Berlusconi will step down soon.

Peter Cardillo, chief market economist at Rockwell Global Capital, called the drop in unemployment claims and the news from Europe encouraging. "It's got the markets on the cheerful side," he told the Associated Press.

Richard Drew / AP

Trader Michael Zicchinolfi runs across the floor the New York Stock Exchange Wednesday, Nov. 9, 2011. Stocks lost about 3 percent on worries about Europe's debt crisis.

Worries that the growing European debt crisis would drag down the global economy slammed Wall Street Wednesday, pushing the Dow Jones industrial average down about 3 percent at the close.

The broader market was harder hit. The S&P 500 and Nasdaq ended down almost 4 percent. The market’s fear gauge, the CBOE Volatility Index, hit a high of 36 during the session. At one point during the session, the Dow was off more than 400 points.

Financial stocks led what was a global rout. Shares of Morgan Stanley, Bank of America, Goldman Sachs, Wells Fargo and Citigroup all tumbled on worries about bank exposure to Europe.  

U.S. stocks had been under selling pressure from the first clang of the opening bell after Italy's borrowing costs soared to 7.502 percent, a level that many feel is unsustainable. Investors pushed Italian rates higher because they wanted more than just Italian Prime Minister Sylvio Berlusconi’s promise he would step down when the Italian parliament passes a package of austerity measures.

Global investors took their money and ran amid rising worries that they wouldn’t be getting their money back. They fear that Italy, Europe's third-largest economy, will not be able to deliver on promises to get its fiscal house in order, no matter who is running the country.

"Italy's latest debt woes signal a new, even more dangerous phase in Europe's debt crisis," Mohamed El-Erian, co-chief investment officer at PIMCO, told Reuters. PIMCO is home to the world's largest bond fund and a holder itself of Italian sovereign debt.

In Greece, power-sharing talks fell apart between the country's two main political parties, raising doubt about whether the country will be able to receive the next installment of emergency loans it needs to avoid default.

Markets fear that a chaotic default by either Greece or Italy would lead to huge losses for European banks. That, in turn, could cause a global lending freeze that might escalate into another credit crisis similar to the one in 2008 after Lehman Brothers fell.

Some analysts fear that the euro itself could fall, which would lead to inflation and a breakdown in free trade agreements in the European Union.

European markets also fell sharply. Italy's benchmark index plunged 3.8 percent. Germany's DAX and France's CAC-40 each lost 2.2 percent.

The prices of assets seen as safe havens rose sharply. The dollar jumped 2 percent vs. the euro. The yield on the benchmark 10-year Treasury note fell to 1.97 percent from 2.08 percent late Tuesday, a steep drop.

U.S. stock index futures tumbled Wednesday as a spike in Italian bond yields fueled fears the country will need a bailout, ratcheting up the region's debt crisis to another level.

Italian borrowing costs reached a breaking point, hitting 7.5 percent as Prime Minister Silvio Berlusconi's promise to resign failed to raise optimism about the country's ability to deliver on long-promised economic reforms.

Italy has replaced Greece at the center of the euro zone debt crisis and is teetering on the cusp of requiring a bailout that many say Europe cannot afford to give.

Portugal and Ireland were forced to seek bailouts when their borrowing costs reached similar levels.

"You are dealing with a pretty substantial economy, you are not dealing with a Greek economy, you are dealing with something that is far more significant," said Barry Ritholtz, chief market strategist at Fusion IQ in New York.

"I don't think Italy can just walk away, they can't simply default whereas Greece can, because if they do that is the end of the euro."

By midday, European stocks were lower by 2 percent after an early rally that had been ignited by Berlusconi's announcement to step down.

Adding to worries about the region, a plan for a former European Central Bank official to lead a Greek coalition government ran into trouble, sources said, as the nation sought to head off a feared bankruptcy.

S&P 500 futures slumped 27.6 points and were well below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures lost 213 points while Nasdaq 100 futures dropped 46.75 points.

Adobe Systems Inc fell nearly 10 percent to $27.50 in premarket trade after the software maker said it plans to lay off more than 7 percent of its workforce.

General Motors Co slid 3.8 percent to $24.08 after the automaker said it expects to miss its target for the year to break even in Europe due to deteriorating conditions in the region.

After the closing bell, Cisco Systems Inc, the maker of Internet networking gear, will report quarterly results. Shares were off 1.4 percent to $18.05 premarket.

On the economic front, the Commerce Department releases wholesale inventories for September at 10 a.m. EST . Economists forecast inventories to rise 0.5 percent versus a 0.4 percent increase in August.

Federal Reserve Chairman Ben Bernanke will speak at a small business and entrepreneurship conference at 9:30 a.m. EST.

By msnbc.com staff and news services

Stocks staged an afternoon rally Tuesday, ending the day with sharply higher after news that after Italian Prime Minister Silvio Berlusconi said he will step down.

Berlusconi promised to resign after parliament passes economic reforms demanded by the European Union to save Italy from getting engulfed further in Europe's debt crisis.

According to preliminary calculations, the Dow Jones industrial average ended 102.02 higher, or 0.85 percent, to 12,170.41. A Monday rally had the Dow back over 12,000, and at its highest close since Oct. 28.

The S&P 500 rose 14.80, or 1.17 percent, to 1,275.94. The Nasdaq ended 33.24 higher, or 1.20 percent, to 2,727.49.

The hope was with his ouster the country would be able to better handle its massive debt issues.

"The market is up because at least one half of the battle is done, but we still have the other half left. We still need to find out how he will be replaced," said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire, told Reuters.

Stocks had been up immediately after the opening bell, but began falling an hour into the trading day.

Investors got a bit of good news about the U.S. economy as the Labor Department reported that employers are advertising more jobs than at any point in the last three years.

CNBC's news team breaks down today's trading session, including news out of Europe.

By msnbc.com staff and news services.

Stocks were at a high for the day entering the last hour trading Tuesday, following a midafternoon spike on the news that after Italian PrimeMinister Silvio Berlusconi said he will step down.

Berlusconi promised to resign after parliament passes economic reforms demanded by the European Union to save Italy from getting engulfed further in Europe's debt crisis.

Approaching 2 p.m. Eastern the Dow Jones industrial average was up 0.66 percent. The S&P 500 rose 0.89 percent. The Nasdaq was 0.93 percent higher. Prior to the announcement, stocks had traded flat or lower.

The hope was with his ouster the country would be able to better handle its massive debt issues.

Stocks had been up immediately after the opening bell, but began falling an hour into the trading day.

Investors got a bit of good news about the U.S. economy as the Labor Department reported that employers are advertising more jobs than at any point in the last three years.

Keith Springer of Springer Financial Advisors discusses the impact of Berlusconi's announcement on the market with CNBC.

Previously: Stocks spike after Italian PM says he will resign