WASHINGTON – American financial and investment markets took a major hit during trading yesterday. With little in the way of economic reports investors turned south primarily based on worries regarding the solvency of European banks and potential pitfalls in the U.S. The S&P 500 suffered the worst day dropping 1.15 percent (12.67 points), but the NASDAQ followed closely behind with a 1.11 percent (24.86 points) decline of its own. The Dow Jones performed marginally better (1.03 percent, 107.24 points) but it still fell by more than 1 percent.

In this case the worries concerning Europe seem to have some foundation. According to MarketWatch, policymakers within the Bank of England are already at odds regarding whether or not the country should tighten its monetary policy. Some want the bank to follow Europe’s lead and rein in easy money. Others want to follow the American lead and maintain nearly free lending rates to the banks without regard to the inflationary pressure this creates.

In other news, according to Bloomberg, German industrial production has fallen short of most estimates for the month of July.

Germany has been, by far, the most impressive economy in Europe throughout this global recession – only China has performed better. However, both international exports and industrial production took a turn for the worse in July. Sales abroad dropped by 1.5 percent and production at home increase by only 0.1 percent. With the rest of the world still struggling it is no surprise that Germany cannot sell as much as it used too, but the meager increase in domestic production shows that the German people are also tightening their belts.

Early reports show that the Wall Street looks to head lower once again after the opening bell today. President Obama is set to discuss his new vision for creating jobs at a policy speech in Cleveland, Ohio this afternoon.

Unfortunately, whatever the White House says will be juxtaposed against the September release of the Federal Reserve’s Beige Book. The Beige Book provides analysis of all Federal Reserve districts individually and cumulatively. The data contained therein may send markets into a tailspin if investors are not happy with what they find.

According to Reuters, the President’s three-pronged job creation proposal has already been met with a lukewarm response out of Washington. It is therefore unlikely that it will spur much enthusiasm from investment centers.

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