Dow Closes Down 634 Points After Downgrade Of U.S. Credit Rating

NEW YORK (CBSNewYork/AP) — The U.S. stock market joined a sell-off around the world Monday in the first trading since Standard & Poor’s downgraded American debt.

The Dow Jones Industrial Average closed down 634 points Monday and fell below 11,000 for the first time since November. The sharp drop extended Wall Street’s almost uninterrupted decline since late July, when the Dow was flirting with 13,000.

Related: Complete Stock Market Coverage from CBS Money Watch

Treasury prices rose — despite S&P’s assessment that they were a riskier investment than the debt of some other countries like Canada and France. Investors still view Treasurys as one of the world’s few safe havens from turmoil in other financial markets like stocks or commodities.

Investors also flocked to the safety of gold — the precious metal blasted through $1,700 an ounce to an all-time high.

Standard & Poor’s blamed Washington for not doing enough to cut the nation’s  debt and get its finances in order.  It also warned that another downgrade could be on the way. President Barack Obama blamed the downgrade on political gridlock,  saying we can’t reduce the debt without raising taxes and cutting Medicare.

WCBS 880’s Alex Silverman With Mayor Michael Bloomberg On The Credit Downgrade

President Obama renewed a plea to Congress to take action in September and help create jobs and cushion Americans from a still weak economy.

With the U.S. economy in crisis exchanges in Asia, Australia, and New Zealand fell several points after opening Monday morning.  Asian markets were also down in early trading on Tuesday.

Obama said financial markets around the world “still believe our credit is triple A. I and the world’s investor’s agree.”

For the first time in history, Standard and Poor’s announced late Friday that it downgraded the U.S. AAA credit rating, forcing banks to staff trading desks over the weekend and sending the White House into a full court press to calm nerves.

The credit agency blamed the move on the debt ceiling deal, saying it didn’t go far enough to get the nation’s finances in order.

The news of the downgrade came at the end of a roller coaster week for the economy — following the debt deal vote, the Dow’s biggest single drop since the height of the economic crisis in 2008, and unemployment dipping to 9.1 percent.

Investors already concerned about a weak U.S. economy and Europe’s debt problems are now pulling their money out of the stock market, but some traders said it may a needed wake-up call.

“I think this credit rating cut actually, in a perverse way, S&P did this country and perhaps the world a favor,” trader Ted Weisberg told CBS 2’s Alexis Christoforous.

More than 1,000 stocks on the New York Stock Exchange hit 52-week lows. U.S. markets have lost well over $1 trillion in value in just the past 11 trading days.

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(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)


One Comment

  1. Jan says:

    let’s hear it for the sucker’s rally!

    1. lydiass says:

      We put ourselves in the position were at now, big business, small business, republicans and democrats, everyone has an agenda which is mainly motivated by greed.
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  2. Moody Blue says:

    S&P dropped the government’s rating as a pure and simple exercise in MARKET MANIPULATION through short sales:

    Step 1: Borrow stocks and sell high.

    Step 2: Drop the U.S. credit rating.

    Step 3: Wait for markets to plummet.

    Step 4: Buy low and return stocks.

  3. CHARLES D says:

    There is no unity in this country, only greed. The rich wants to get richer and the poor is struggling. Forget about the middle class. Greed is what caused the first recession and greed is what will cause the second one and tear this country apart. A third world war would never destroy this country, the actors working in Washington is what will bring down this country along with the banking system. I should correct myself, this country is already on a decline anyhow. Wait till we see 25 % or 40% unemployment rates.

  4. BumblesForPresident says:

    The Democratic party has killed NY. Now the country……

  5. Ted says:

    I’m very impressed by Barack Obama. It took less than 3 years to increase the national debt by more than 40%, burden us with a health care program that will put the last nail in our financial coffin and divide this country to the point it threatens to tear us apart while also isolating us from our closest allies. Who would have thought this is what he meant by yes we can.

    1. Mark says:

      This is clearly market manipulation. S&P planed two downgrades. The people at S&P didn’t short anything before the first downgrade because they risked being accused of insider trading. But after the first downgrade, it makes sense to sell. The people at S&P can now short sell freely. However, because the people at S&P are the only ones that knew of the upcoming downgrade in Freddie and Fannie, the people at S&P short sold EVERYTHING. They become billionaires. And because of the first downgrade, it’s impossible to prove insider trading. In the meantime, they f’ed up the world economic markets.

  6. Enough Already says:

    Municipalities should be forced to buy AMERICAN products. Open up the factories again. Get rid of all the illegal people and let AMERICANS work. Stop using social security money to pay everything. My grandchildren’s great grandchildren will be paying for this. What happened to if you don’t have the money don’t buy it? Protect our own borders and stop fighting other peoples wars. I’m sure every American would give an extra ten dollars a week to help reduce the debt if the government ruly worked for the people. And make a law that if people work here illegally they cannot send money back to their own countries. Make them spend it here.

    1. Clint says:

      I concur 100%. I have written my useless representatives with comments along these same lines, and get nothing but canned responses. Anything imported to this country should only be allowed in if the come from factories that have to meet the same OSHA and EPA guidelines as American factories. The govt. does not allow foreign cars in unless they meet emission and safety standards of the US, the same rules need to be applied to can openers and drills.

  7. Lieutenantdan says:

    Capitalism is one thing but greed is another.
    Apparently our world is run by sociopaths!
    The rich get richer.
    Bring our jobs back to the USA please.

  8. George Busherman says:

    this is terrible



  10. Michael H. says:

    Go back to your Klan meeting, freak.

  11. Jeffe says:

    Yeah, what a day for sure.
    Between the markets, economy, Jobs, everything. We have some serious issues we need to address. Things can change we just need so real focus and direction.

  12. Farmer Joe says:

    I am taking my gold bars, buying a farm, growing my own vegetables. You can all stick it, adios amigo. Wake me up when the apes take over congress.

  13. jaypee says:

    I hope everyone that voted for Obama is happy now

    1. danny says:

      You see, that is the problem right there. Our system is designed so that no one person has all of the control. It’s just as much Bohners fault as it is Obama’s. Your type of foolishness is what is tearing up our country. Blame DC. All of it. Both sides.

      1. Darla says:

        Well said Danny. I agree with you 100%. If there were more people like you around, we wouldn’t have this problem because the country would be working as it was meant to.

      2. Tom Owens says:

        Obama didn’t do that, CONGRESS DID. It also didnt help that on the last election people voted out Democrats and voted in Republicans. Now we have a Democartic president with a republican house, NOTHING WILL GET DONE NOW. Come next election, vote either ALL Dem or ALL Rep

      3. Ann Marie Kellett says:

        I used to agree with that type of thinking. However, for the 8 years of the Bush administration I saw the left rip him from stem to stern. Everything was his fault. Well now we have a liberal president and a liberal senate and I’m judging them by the same standards they used on Bush.

      4. ham07 says:

        Ann Marie, Thats the problem here, your statement of “judging THEM”, it’s this us vs Them thinking that is ripping this country apart.

    2. DK says:

      If we vote ALL REP or ALL DEM why even have elections? The problem isn’t multiple parties, it’s that they represent their party and themselves NOT their constituants that they’re supposed to. Once voted in, they forget all about US!

      1. Clint says:

        Voting rights should extend down to individuals of 18 years of age only if they are in the military. Otherwise, it should revert back to 21, even better, 25. No one who receives a US Govt. check that was not earned, i.e. welfare, should be allowed to vote at all. This would eliminate the power large municipalities have on deciding the makeup of Congress over the rest of a state that has minimal folks whose interest in an election is putting somebody in that will give them a bigger welfare check.

    3. Eduardo Rey says:

      Let’s see – under our constitution, all bills related to revenue and budget must originate in the House of Representatives, not the White House. The last time I looked the House was in the “control” (and I use that term loosely) of the Republican’ts and the Tea Party wackos. So, from my point of view, the problem lies with them and not Obama who has bent over backward to try to appease these nut jobs.

  14. Reverend Rev says:

    How much money has S&P made today on short sales?

  15. frank says:

    The solution is simple; the problem is the morons, in particular our President, who do not come up with ideas on how to create JOBS!!!! Once you figure that out, revenuw will start to come in. Star simple: Give corporations a break and have them build manufacturing plants here in the US. They will have to be forced to use the money to starting building within one year (yes it can be done) and if they don’t, whatever breaks they are gienv are revoked, and funds returned with interest. That creates construction jobs, which in turn will create hiring once the plant is built and so on. We have to stop giving work to foreign countries. We have to stop rebuilding the countries such as Iraq and Afghanistan. We don’t benefit from that, but rather lose more money. Isn’t it amazing that when Clinton was in office he created 23 million jobs, yet under Obama, we can’t create any.

    1. Michael H. says:

      The corporations have been given break after break and what do they do? They pocket the money and ship jobs overseas. We need to stop rewarding corporations for bad behavior and enhance the regulations on corporate America and STOP corporate control of our government.

  16. Alan says:

    We put ourselves in the position were at now, big business, small business, republicans and democrats, everyone has an agenda which is mainly motivated by greed.

    You guys can keep pointing fingers but just remember that we all played our part in contributing to this greed, rest assured we wont learn until perhaps things hit rock bottom but even then it’s doubtful….and so the world turns round and round in it’s vicious cycle.

    1. Ellen says:

      Alan, The World War 11 generation knew how to save. Most people today don’t have any idea what a saving account is, all they do is live off credit and debit cards. I have family members that live way to off their means because it’s all about buying on credit. To bad because unless Americans change their habit of free spending things are not going to change.

    2. Steven says:

      Well said Alan. We are responsible for our own demise especially when it comes to outsourcing our jobs to China, India and the Philippines. Now companies are reporting record earnings, partisanship is at an all time record high in congress and everybody is blaming each other. Here comes 2008 all over again!!

      1. Alan says:

        Outsourcing is one of the many symptoms of this evil called “greed” we can continue as we have until now in applying band-aids however greed still festers and not until we have a major paradigm shift felt by “everyone” will there be change.

  17. George Washington says:

    I agree that the Tea Party has a lot to do with our problems today. They never learned how to share and are acting like a bunch of spoiled brats. We all remember kids like that…if you didn’t do what they wanted, they quit. The problem is, these kids never grew up. They are now adults who are so set in their ways that they would rather destroy our country then work out a compromise. Do they really think spending cuts alone will fix things? Grow up before its too late. If you are such a patriot, then act like one.

    1. greg says:

      “The credit agency blamed the move on the debt ceiling deal saying it didn’t go far enough to get the nation’s finances in order.”

      unfortunately GW, as you can see, the debt deal did not go far enough with its cuts over the next decade to control our debt. in other words we are not only going to continue to run a deficit this year, but we are going to run a bigger deficit for each subsequent year for the next decade. apparently the S&P (moody’s) made it clear to all involved that a $4 trillion cut was needed in (net) government spending over the next ten (10) years. realize that the bowl-simpson plan did go far enough in its cuts (but raised taxes which would have killed the economy).

      1. GW says:

        Unfortunately, Greg, as you can see, the debit deal will never go as far as we need to without revenue. There is only so much you can cut, then what? The 4 trillion cut is needed because there will be no additional revenue. It’s like trying to run a household today with a 1950’s paycheck. Please keep in mind that cutting taxes DID NOT create new jobs. It just made the big corporations richer.

  18. Jose Daniel Gonzalez says:

    Obama is too embarrassed to show is face to America after what is going on abroad and our markets today.Down 400 plus.

  19. Jose Daniel Gonzalez says:

    Where is Waldo!!!!!!! OBAmA!!!!!!
    Are you hidding!!!!

  20. greg says:

    actually, the whole world’s markets are tumbling. where they’ll stop nobody knows. this is where obama has a chance to be a heel or a hero. what he needs to do is pass an Executive Order calling the House of Representatives back to session immediately and work to modify the new debt deal that was just hammered out. The democrats and president now must take seriously the need to cut 4 trillion dollars NET over the next ten (10) years and modify the deal to show this/represent this. if they don’t, they’ll take the whole world down with the ship. if they do it now, some of us will get into lifeboats and be saved. the ball is in their court!

    1. Jose Daniel Gonzalez says:

      The Titanic Revisited.

  21. Johnny Handsome says:

    LMMFAO! The coloreds first. That would mean that the coloreds are the chosen people. The Rapture will take the chosen first and leave the evil behind. Sounds about right Dr.

  22. Darla says:

    Our problem is that noone wants to work together. Our country seems to be split right down the middle. The spiirit of compromise, which is the backbone of this country, is gone. It seems our fellow country men hate each other and are blinded by their selfishness. The rich think everyone is trying to “steal” their money and the middle class is just about extinct. With this type of culture in place, no solution will be reached The rest of the world sees this and knows we are coming apart at the seams. What a mess!!! Unless we go back to our roots and begin to work together for the good of our country, it’s only going to get worse.

    1. Michael H. says:

      The President and the Democratic Party are more than willing to compromise. The problem is the Tea Party controlled GOP refuse to cross the aisle and give some concessions. The Tea Party controlled GOP does not know the meaning of compromise and repeatedly lies to the American people with that regard.

    2. Jan says:

      The problem, Darla, is that while there are plenty willing to “work” towards that goal, there’s the other half to consider with an entitlement mentality–their hands out DEMANDING compensation for this or that. I certaianly enjoy the Polyana notion that this nation was built on compromise but, long ago, there was a much more robust sense of individualism that is almost as extinct now as that fabled ‘Middle Class’ you referenced in your post. I’m certain we can agree it’s sad, in any case.

    3. Jan says:

      The problem, Darla, is that while there are plenty willing to “work” towards that goal, there’s the other half to consider with an entitlement mentality–their hands out DEMANDING compensation for this or that. I certaianly enjoy the Polyana notion that this nation was built on compromise but, long ago, there was a much more robust sense of individualism that is almost as extinct now as that fabled ‘Middle Class’ you referenced in your post. I’m certain we can agree it’s sad.

  23. ted says:

    the US deserves the downgrade.we should all be thankful for the tea party movement.the tea party will only get stronger as we move forward.the economic problems were years in the making but were accelerated greatly when the democrats took over congress in 2006 and we elected an unqualified american idol president.

    1. Michael H. says:

      The Tea Party is directly responsible for the downgrade for refusing any sort of compromise on the debt deal. S&P said so themselves in their report explaining the downgrade. This country began its downslide when Bush started two unfunded wars. Remember, we were running a budget surplus and paying down the debt before Bush took office.

  24. Ellen says:

    I hate them all in Washington, Republicans, Democrats and those nit wits The Tea Party. Hate them all.

  25. greg says:

    This DOW drop and market panic is purely a man-made doing. Nothing in America’s economy or political budget renderings deserves a change from America’s AAA bond ratings to AA+ ratings by Moody’s. just because the ceo of Cisco who could not adequately run that job and lost it does not mean he should take it out on the american financial system while he’s chairman of Moody’s. although he explained himself, i heard nothing that backed up his reasoning for making the change. now put it back!

  26. christine says:


    1. kevin says:

      were you born under a rock, or are you just under there watching the FOX news channel? Of course the Tea Party has to take some of the blame. From I saw on all the news sources, the tea party were the ones that didnt want to compromise. Remember that word? or is it not used in Fox Ditto heads vocabulary?

      1. Steve says:

        You are a moron. If it wasn’t for you gullible idiots we would not be in this debt in the first place. Why don’t you research the facts and stop listening to the propaganda of the mainstream media. Mainstream makes me sick. Learn some common sense! You bet I listen to Fox news, Hannity, Levin, Savage, ect….Listen to Mark Levin for 3 hours after a speech by Obama. He will set you straight!

      2. Michael H. says:


        We were running a budget surplus and paying down the debt before Bush’s two unfunded wars. Yes UNFUNDED. He started two wars while simultaneously cutting taxes.

        Hannity, Levin, Savage, none of them have America’s interests at heart. All their care about is their ratings and subsequently their bank accounts. Same goes for Rush and Beck. You spout off about people listening to propaganda when you admit to the same thing yourself. Right wing talk radio/FOX news is nothing BUT propaganda for the right wing. Seek you news from multiple sources to get the truth. Trusting one set of pundits makes you as ignorant as the so called “gullible idiots”.

      3. Johnny Handsome says:

        Steven, Steven, Steven, Still dumb as a brick. Oh well. FOX “NEWS” is not “news”. Its ENTERTAINMENT. Like I Love Lucy or Everybody Loves Raymond. If you are getting your views of the world from Barney Miller, I suggest you not broadcast that fact all over the place.

    2. IdrinkCoffee says:

      They said they didnt care if the US defaulted. That sent the signal that the USA is bad on its debt and doesnt want to repay, Thanks Teabagging isiots!

    3. joe says:

      are you serious??

    4. Michael H. says:


      The Tea Party controlled GOP absolutely refused to make the necessary compromises to bring about the proper increase in this country’s debt ceiling. The only way to solve our budget issues are BOTH spending cuts and revenue increases. The Tea Party controlled GOP is under the naive assumption that simply cutting spending will solve our problems. When told otherwise they stick their fingers in their ears and scream “La La La WE CAN’T HEAR YOU!!!” like little children.

      THAT is why we were downgraded by S&P.

    5. Johnny Handsome says:

      Christine – when you become a grown up you will find that what you hear on Fox news is mostly to get the less intelligents of America all riled up. See, Christine, they lie a lot on Fox news. I know, I know. You mommy said lying was bad and you shouldn’t do it. She was right. Lying is bad but people will do anything for money. I know this my crush you view of the world but you need to know. Also, there is no Tooth Fairy and Santa dies in 1983 from a crack overdose.

  27. Reverend Rev says:

    This is Market Manipulation 101. S&P deliberately downgraded U.S. credit just to cause a market downturn and make lots of money.

    1. greg says:

      agreed. makes you wonder who was notified ahead of time of these changes so that they could either protect their money or position their money for best advantage at making gains.

    2. Johnny Handsome says:

      At least one person here gets it. But its gonna get a lot worse.

  28. PaPa Joe says:

    Don’t bother responding to this one. He, and I’m guessing, is probably just looking for attention. His 15 minutesa is just about up – let him go,

  29. Mike says:

    Tea Baggers should be proud. What a bunch of loosers and silly Americans for believing the Tea Bag lies.

    1. COFFEE DRINKER says:

      Tea Baggers are almost as bad as those EVIL democrats

  30. Mike says:

    Allah is a myth! IDIOT!!

    1. Michael H. says:

      “Allah” is Arabic for “God”. Plain and simple. “Allah” is the same invisible sky daddy that the Jews and Christians pray to.

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