There are several points of confluence between financial markets and the real economy. Asset price volatility can produce negative effects on confidence, of course, forcing economic agents to reconsider their own business activities. More than that, in the gigantic bond market, in particular, a turn in pricing regimes is often accompanied by the dreaded credit crunch. That's when it starts to get serious.
In the summer of 2007, even before everything really started to go south, you could tell there was a pretty serious economic setback looming when debt deals were pulled having nothing whatsoever