New York - Stocks took a sharp nosedive in another choppy day Monday to finish at session lows as investors fled from risky assets following S&P’s downgrade of U.S.'s credit rating last week in addition to ongoing economic jitters.
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The Dow Jones Industrial Average plunged 634.76 points, or 5.55 percent, to finish at 10,809.85, well below the psychologically-significant 11,000 mark. The move marks the blue-chip index’s biggest point and percent drop since the global financial crisis 2008. It is also the sixth worst point decline for the Dow in the last 112 years
The S&P 500 plummeted 79.92 points, or 6.66 percent, to close at 1,119.46, while Nasdaq sank 174.72 points, or 6.90 percent, to end at 2,357.69. All the 500 stocks in the S&P 500 index declined Monday.
Shares of Bank of America Corp. (BAC), the largest banking corporation in the US, erased 20 percent to lead financial shares in the S&P 500 down 10 percent. Ford Motor Co. (F) and Caterpillar Inc. (CAT) slumped at least 8.4 percent, pacing losses in stocks most- tied to the economy. Chevron Corp. (CVX) fell 7.5 percent as oil sank to an eight-month low.
Investors worried about the slowing U.S. economy, escalating debt problems threatening Europe and the prospect that fear in the markets would reinforce itself, as it did during the financial crisis in the fall of 2008.
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“'What’s rocking the market is a growth scare,” said Kathleen Gaffney, co-manager of the $20 billion Loomis Sayles bond fund. “The market is under a lot of stress that really has little to do with the downgrade.” Instead, Gaffney said, investors are focused on “how Europe and the U.S. are going to work their way out of a high debt burden” if economic growth remains slow.
The concern about the U.S. credit rating was amplified when Standard & Poor’s announced Monday morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But traders said much of the pessimism Monday resulted from broader concerns about the economy.
“I dont think the S&P announcement is the lead director of the day – I just think it is the icing on the cake,” said Jonathan Corpina, a trader on the New York Stock Exchange for Meridian Equity Partners.
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Markets have fallen nearly every day for the last two weeks and are now down to levels last reached in September of last year.
Gold set a record. It rose $61.40 to settle at $1,713.20. Crude oil, natural gas and other commodities fell sharply on worries that a weaker global economy will mean less demand. Oil fell 6.4 percent to settle at $81.31 per barrel.
Fear is spreading quickly through the market, said Dimitre Genov, senior portfolio manager with Artio Global Investors. “It’s becoming a vicious cycle and could feed into consumers reducing their demand as well.”
The downgrade extended a rout that had wiped out $1.94 trillion in market value from the countrys stocks amid concern the economic recovery is at risk. Global equities tumbled and European shares have entered a bear market.
Source:
http://www.bloomberg.com/news/2011-08-0 … wdown.html
http://news.blogs.cnn.com/2011/08/08/st … downgrade/
http://www.cnbc.com/id/44058141
http://latimesblogs.latimes.com/money_c … oints.html
http://www.westport-news.com/news/artic … 764571.php
http://247wallst.com/2011/08/08/the-mar … -vhc-rmbs/
