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Wall Street Plunges after U.S. Downgrade
Aug 9,2011 10:05CST
industry news
Source:SMM
The U.S. stocks tumbled on Monday as S&P 500 and Nasdaq Index both dropped more than 6 percent and Dow lost more than 600 points.

NEW YORK, Aug. 9 (Xinhua) -- The U.S. stocks tumbled on Monday as S&P 500 and Nasdaq Index both dropped more than 6 percent and Dow lost more than 600 points after a historic downgrade of U.S. credit rating by Standard & Poor's.

Late on Friday, the rating agency Standard & Poor's downgraded U.S. credit rating from AAA to AA+, a move reflected the agency's worried about the world's largest economy's debt problems.

Investors rushed to pull out their bet on the equity markets on Monday, the first day they could react to the downgrade move. The CBOE Volatility Index, which is regarded as the best gauge of markets'fear, jumped nearly 50 percent to 47.51, the figure's first leap above 40 since May 2010.

The Dow Jones industrial average lost 634.76 points, or 5.55 percent, to 10809.85. The Standard & Poor's 500 was down 79.92 points, or 6.66 percent, to 1,119.46, its largest drop in nearly three years. The Nasdaq Composite Index dropped 174.72 points, or 6.90 percent, to 2,357.69.

All sectors were in the negative territory with capital goods, energy and financial sectors were among the most decliners.

The yield of 10-year Treasury note continued to decline to below 2.4 percent, as investors still believed the treasury bonds are safe bet especially in turmoil.

Besides U.S. debt concerns, investors also worried that Spain or Italy could become the next European country to be unable to pay its debt.

Although the European Central Bank said that it will buy Italian and Spanish bonds to help the countries to avoid a possible default, investors worried given the much larger economic scale, comparing with Greece and Portugal, it would be much harder for ECB to rescue the eurozone's third and fourth economy.

In other markets, gold was pushed higher by risk-aversion investment. Gold futures rallied 4.2 percent to close at a record high of 1718 dollars an ounce.

Oil, which is regarded as a risky investment, fell 6.41 percent to close at 81.31 dollars a barrel.

 

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