Today: Markets nose-dive on Europe news, doubts about Congress. Plus: A possible Yahoo (YHOO)-AOL merger and Sprint's plans for the iPhone.

Markets plummet, but analysts say it's not Obama's fault

Wall Street's week ended on an extreme down note, as all the major indexes fell at least 2.4 percent the day after President Barack Obama announced a major jobs initiative, but analysts said the decline had more to do with Europe and Congress than Obama's speech.

"There's that nagging thought that we can continue to have a downward spiral in Europe," James Dunigan, chief investment officer for PNC Wealth Management, told Bloomberg News. "There's concern of a default, of risk in banks, of a liquidity crisis. In the U.S., even as President Obama made an effort to put that plan together, there's not a whole lot of confidence that Congress will pass."

Clark Yingst, the chief market analyst at Joseph Gunnar, told the New York Times that positive moves in the markets earlier this week were in preparation for Obama's announcement of a pro-jobs stimulus plan, but that "the market just doesn't believe that it is going to be passed by that Republican House."

In Europe, Juergen Stark, the top economist at the European Central Bank, resigned, causing a ripple of fear about possible debt default by struggling countries there. He reportedly quit because he opposed the ECB's extensive purchases of those nations' debt, according to the Associated Press.

With many of those countries' bonds held by major banks throughout Europe, a default would severely hurt the continent's economy, so the resignation of a key economist who had been fighting the moves was seen as "a bit of news that contributes to a worse outcome, so if you're thinking of being a seller, today that's what you are," Andrew Goldberg, market strategist with J.P. Morgan Funds, told AP.

No matter the reason, the effects were large. Several Silicon Valley stocks tumbled with the markets Friday, including drops of more than 4 percent by Hewlett-Packard (HPQ), eBay (EBAY), Gilead, SunPower (SPWRA) and AMD. The Dow Jones industrial average closed below 11,000.

AOL CEO checks in on possible merger with Yahoo

One of the few stocks to increase on Friday was Yahoo (a scant 0.3 percent rise), but that was not because a sense of stability arrived at the Web company's Sunnyvale headquarters.

A Bloomberg News report Friday said AOL was discussing a merger of the two companies with Yahoo advisers, with AOL CEO Tim Armstrong leading the talks.

According to the report, Armstrong made similar overtures while Bartz was at the helm, but she had no interest. Now, with Bartz out of the way, Armstrong is pushing for a deal which would have Yahoo buy AOL and install him as CEO of the merged companies.

This sort of deal has been rumored for some time, and analysts are not enthralled by the idea. As Karsten Weide, an industry analyst at IDC, told Mercury News columnist Chris O'Brien earlier this week about an AOL-Yahoo merger, "Two turkeys don't make an eagle."

CNBC later tweeted that Yahoo is not interested in Armstrong's plan, but the company is obviously preparing for something, as they have been in contact with two different banks that could help manage a sale or merger for all or part of the company.

Sprint considering unlimited data for iPhone users

When Sprint begins offering the iPhone next month, it will offer unlimited data plans for $99.99 a month in order to distinguish itself from bigger rivals AT&T and Verizon, according to a report.

Verizon and AT&T both cap data usage and charge different amounts depending on how much their customers use the device. Sprint, which has not turned a profit in more than a year, wants to offer something better to users in their long-awaited entry into the market for the popular Apple (AAPL) smartphone, Bloomberg reported.

Will the tactic succeed?

"The advantage of unlimited is, it's cheaper for the big users," said Peter Rhamey, an analyst at Bank of Montreal. "Consumers will pay a premium for unlimited."

Silicon Valley tech stocks

Up: Yahoo

Down: Hewlett-Packard, eBay, Gilead, SunPower, AMD, Electronic Arts (ERTS), Cisco (CSCO), Oracle (ORCL), Google (GOOG), Apple

The tech-heavy Nasdaq composite index: Down 61.15, or 2.42 percent, to 2,467.99

The blue chip Dow Jones industrial average: Down 303.68, or 2.69 percent, to 10,992.13

And the widely watched Standard & Poor's 500 index: Down 31.67, or 2.67 percent, to 1,154.23
