NEW YORK — Hope that the Federal Reserve might consider more economic stimulus wasn’t enough to keep bad news about Ireland from sinking stocks. Ireland’s government bonds were downgraded by ratings agency Moody’s to junk status shortly before U.S. markets closed Tuesday, sending stocks sharply lower and erasing the day’s gains. Ireland joins Greece and Portugal, whose debt was also recently graded as junk.
The move puts Ireland back on the list of heavily-indebted European countries in danger of default. The country has already received a financial rescue package from other countries. If a European country fails to pay its debts, it could cause widespread disruptions in financial markets and lead to a slowdown in lending. Worries about debt problems in Europe sent stocks down through the first half of June and appear to be having the same effect in July.
