When Europe sneezes, the rest of the world catches a cold.

That phrase usually applies to the United States, but Europe's recent credit problems have spooked the world's stock markets, sending them off more than 5 percent.

The Dow opened at 9,934 Feb. 8 and closed down 108 points, on worries that the Greek sovereign debt woes could be contagious. Those fears were eased slightly Feb. 9 by the German government, and the Dow rallied to close at 10,059.

Further weighing on investors' minds is the threat that the Federal Reserve will become hawkish in its monetary policy and begin considering interest rate hikes.

Investors worry that the credit crisis in certain European countries is contagious and will hurt even the strongest markets in Europe.

Another credit crisis could signal a double-dip recession, as countries react with higher interest rates and higher taxes.

The Dow Jones Industrial Average is off nearly 800 points since hitting a several-year high in mid-January.

The slide continued Feb. 5, even as the nation's unemployment figures indicated a dip below 10 percent to 9.7 percent. Economists don't expect unemployment numbers to imrpove in 2010.

Technically, the economy is out of the recession, as GDP growth climbed in the last quarter.

But economists and market experts believe it will be a long, slow grind toward true economic recovery and another recession is not out of the question, as the government removes fiscal stiumulus programs.

A text-book market correction would be a 20 percent dip, but the recent sell-off is spreading a lot of pain, nevertheless, around the world. The MSCI Asia Pacific index slumped 2.6 percent on Friday.

The one beneficiary is the dollar versus the euro. The euro broke through a key marker, $1.36 on Friday, as concerns were raised this week about Greece's debt woes.

Traders suspect that the sovereign debt problems in Greece extend to Spain (Europe's fourth largest economy) and Portugal, as well as much of the Euro zone.

Most commodities are getting crushed, as the dollar gains strength. Gold also has slumped to $1,050.

The dip in equities markets could be a temporary boost for U.S. home buyers, as 30-year rates dipped to 4.75 on Friday. But as the dollar rallies, interest rates typically begin to climb.

The Dow closed at 10,015 on Feb. 5, and the S&P at 1,066.