Dow Falls 634 Points, S&P and Nasdaq Down 6.7 %

Monday, 08 Aug 2011 02:08 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

Investors fled stocks on Monday in the first session since Standard & Poor's cut the United States' perfect AAA credit rating, reflecting growing discouragement about the economic outlook and Washington's ability to meet the challenges.

Monday's sharp losses extended the slide on Friday, when Wall Street wrapped up its worst week in more than two years on concerns about flagging economic growth and fears of a financial meltdown in the euro zone. The S&P 500 is down nearly 16 percent from its closing high reached on April 29, putting it solidly in correction territory.

By the closing of the market Monday, the Dow ended the day down 634.76 points, closing at 10,811. The S&P and Nasdaq were down more than 6.7 percent.

The CBOE Volatility Index, Wall Street's "fear gauge," jumped 21.2 percent to 39.04, after topping 40 for the first time since May 2010 at its intraday peak.

While all 10 S&P sectors fell more than 1 percent, the groups most sensitive to the economy, such as banking and commodities, were the hardest hit. The S&P financial index sank 5.9 percent while an S&P energy index lost 4.5 percent.

"The downgrade was more of a psychological blow that piled onto a market that was already reeling," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis, Tennessee.

"When you get this kind of panic and fear into the market, it goes beyond any realistic or sensible level. I wouldn't put all my money in stocks right now. I'd hold some back."

The Dow Jones industrial average dropped 345.91 points, or 3.02 percent, to 11,098.70. The Standard & Poor's 500 Index slid 48.04 points, or 4.01 percent, to 1,151.34. The Nasdaq Composite Index lost 105.47 points, or 4.16 percent, to 2,426.94.

Late on Friday after the market's close, S&P cut the U.S. long-term credit rating by one notch to AA-plus on concerns about debt levels in the world's largest economy. The downgrade could eventually raise borrowing costs for the U.S. government and companies, as well as for consumers.

In Monday's session, Bank of America Corp was the most actively traded stock on the New York Stock Exchange and the S&P 500's biggest loser, plunging 15.9 percent to $6.87.

United States Steel Corp slid 8.9 percent to $30.25. Only four of the S&P 500's components were in positive territory.

Monday's selling extended to other assets, with U.S. crude oil futures down about 4 percent, or $3.36, at $83.52 a barrel.

Gold, which is seen as a safe haven, surged 4.1 percent to above $1,714 an ounce and rose above platinum prices for the first time since December 2008.

Even the European Central Bank's dramatic intervention in bond markets, which pushed down yields on Spanish and Italian bonds, was not enough to stem selling.

GETTING CLOSE TO A BOTTOM?

But some analysts noted the mass selling has made some stocks attractive at lower prices.

"This is a very oversold market that has come down far too rapidly," Gibbs said. "We're due for a bounce and the opportunity for one is good at the levels we're at. Still, it's nearly impossible to pick a bottom in this environment."

Barclays Capital, in a note to clients, wrote that the decline created a "time to buy," and that the recent losses "left equity valuations at levels of cheapness not seen since the early 1980s."

Declining stocks outnumbered advancing issues on the New York Stock Exchange by a ratio of 30 to 1, while on the Nasdaq, decliners beat advancers nearly 8 to 1.

In company news, Verizon Communications Inc fell 3.4 percent to $33.85 a day after nearly half of its wireline business employees went on strike. The drop in the Dow component's stock was not as steep as the broader market's decline because telecom is viewed as a defensive sector.


© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Democratic Pollsters: Obama Hurting Hillary's Chances

Sunday, 23 Nov 2014 21:52 PM

Two Democratic Party pollsters say President Barack Obama is hurting Hillary Clinton's presidential chances in 2016. . . .

Important Medicare Changes for 2015: What You Need to Know

Sunday, 23 Nov 2014 21:13 PM

Millions of seniors will have to dig deeper to pay for their Medicare benefits next year, thanks to rising costs for hea . . .

Report: Israel Considering Military Action Against Iran

Sunday, 23 Nov 2014 19:53 PM

As the deadline for nuclear talks between the P5+1 powers and Iran looms on Monday, Israel is warning it might use milit . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved