NEW YORK -- Europe's debt problems rumbled through global financial markets again Tuesday.
U.S. stocks fell sharply in early trading when it appeared that European markets were heading for a second straight day of deep losses. The Dow Jones industrial average lost as many as 307 points by 10:45 a.m. Late-day recoveries in both the U.S. and Europe left indexes with relatively modest losses. The Dow ended down 101 points.
"It's becoming a pattern that the U.S. market breathes a sign of relief once trading in Europe is finished," said Quincy Krosby, market strategist at Prudential Financial.
Europe's debt problems, which have simmered for more than a year, are deepening. Bailouts for Ireland and Greece have not quelled fears that either country will default on its loans, an event that could lead to the collapse of the euro.
The Stoxx 600 Europe index lost 4.1 percent Monday, while U.S. markets were closed for Labor Day, as traders worried that Europe's debt problems could slow economic growth around the world. Italy was hit by a general strike Tuesday ahead of votes this week on a budget-cutting package needed to shore up that country's finances.
Peter Boockvar, equity strategist at Miller Tabak & Co., said investors are becoming more fearful that the Greek government may not pay bond investors back. "Officials are coming to the realization that there's no way Greece can pay its money back and maybe we're better off just letting it default," he said.
September is historically the worst month for the stock market. The Dow has dropped an average of 0.9 percent each September since 1950, according to the Stock Trader's Almanac.
Traders expect the trend to hold true this year as uncertainty continues over Europe's debt crisis and the stagnating U.S. economy.