Wall Street Slumps on Economic Concerns, France Rumors

NEW YORK, Aug. 11 (Xinhua) -- U.S. stocks tumbled on Wednesday with all three major indexes down more than 4 percent, as investors concerns about the economy and rumors said France might lose its triple-A credit rating.

After the first-ever downgrade of U.S. credit rating last Friday, the markets went wild in the first two trading days this week.

The Federal Reserve decided on Tuesday to maintain its ultra- loose interest rates for at least 2 years and hinted to carry out more measures if economic condition requires. The central bank's pledge helped shore up the markets as Dow soared more than 600 points in last hour trading on Tuesday.

However, on Wednesday, rumors spread in the markets that France might lose its triple-A credit rating, which raised investors' concerns about the European country's health of debt and triggered a sell-off of French banks.

The concerns also weighed on the U.S. stock markets as all three major indexes erased Tuesday's gains. Dow Jones Industrial Average dropped more than 500 points to close at 10719.94, S&P 500 dropped 4.42 percent to close at 1120.76, Nasdaq Composite Index slipped 4.09 percent to 2381.05.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, climbed 22.7 percent to 43.01.Among key sectors in S&P 500, financials and industrial led the decline.

On other markets, oil surged more than 4 percent after the U.S. government said crude supplies shrank more than expected last week and a new report forecasted strong global demand.

Gold ended at record high of 1784.30 dollars an ounce due to risk-aversion appetite. While 10-year Treasury note yield dropped to 2.15 percent as investors still believed the treasury notes are safe bet in turmoil.