Withdrawals from money market mutual funds and fears that net asset values would fall further severely disrupted commercial paper and other short-term funding markets, and longer-term credit became much more costly as risk spreads on corporate debt instruments jumped and private interest rates rose.
The problems in credit markets and concerns about the economy have caused equity prices to swing sharply and to decline significantly, on net. Even before the recent heightening of the financial market turmoil, economic activity had shown considerable signs of weakening.