Stocks Tumble After Downgrade Of U.S. Credit Rating

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

August 8, 2011 11:45 PM

In this Aug. 4, 2011 photo, a trader works on the floor of the New York Stock Exchange. (credit: Jin Lee/AP)

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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.

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.

Are you worried? Let us know below…

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Jan

let’s hear it for the sucker’s rally!

lydiass

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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Moody Blue

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.
CHARLES D

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.
BumblesForPresident

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

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.

Mark

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.

Enough Already

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.

Clint

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.

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