Stocks Dive on Italy Debt Fears

Stocks tumbled on Wednesday in its worst day since August, as a spike in Italian bond yields signaled the European debt crisis was getting worse. The Dow Jones Industrial Average fell 389.24 points, or 3.20%, to 11,780.94. The S&P 500 lost 46.82 points, or 3.67%, to 1,229.10. The Nasdaq Composite sank 105.84 points, or 3.88%, to 2,621.65.

Investors today propelled Italy’s 10-year bond yield to close at a euro-era high of 7.25 percent after the promised exit of Prime Minister Silvio Berlusconi failed to convince them that his country can slash Europe’s second-largest debt burden. The biggest signal yet that the single currency’s third- largest economy is falling prey to its two-year debt crisis forces German Chancellor Angela Merkel, European Central Bank President Mario Draghi and their peers to decide just how far they’re willing to go to defend the euro.

Cisco Systems Inc, the world’s biggest networking equipment maker, reported quarterly earnings per share that beat estimates, signaling that efforts to revive growth are beginning to pay off. The company on Wednesday reported adjusted earnings of 43 cents per share for the fiscal first quarter ended October 29. Revenue rose to $11.3 billion from $10.75 billion a year earlier, versus the average forecast of $11.03 billion.

Goldman Sachs Group Inc faces lawsuits over $15.8 billion worth of mortgage securities, the bank said in a regulatory filing on Wednesday, a more than 30-fold increase from the amount disclosed three months earlier.

Losses on securities investments at the core of a scandal rocking Japan’s Olympus Corp may have once exceeded $1 billion, the Nikkei newspaper said on Wednesday, as the 92-year-old firm’s share price plunged due to doubts about its future.