Dow Jones industrial average plunges 600 as market rout continues

Posted: August 8, 2011 in Economic Crisis, US News

The Los Angeles Times
August 8, 2011

The Dow Jones industrial average plunged as much as 600 points midday Monday as the market rout continued in the first day of trading after Standard & Poor’s downgraded the United States’ credit rating.

Investors have piled out of stocks all day and into a few safe havens, such as gold and Treasury bonds. The appetite for Treasury bonds suggests that the Standard & Poor’s downgrade of the U.S. has not shaken the faith of investors in U.S. bonds.

Market experts said that the market selloff on Monday was sparked by the S&P announcement, but is more motivated by growing concerns about the weakness of the global economy.

“It’s really all about economics,” said Mike Norman, the chief financial strategist at John Thomas Financial.

The Dow was recently trading down 536.18 points, or 4.7%, at 10908.43, and is on track to have its worst day since December 2008. The broader Standard & Poor’s 500 index was down even more sharply, 68.49 points, or 5.7%, to 1130.89.

“It’s been harried,” said Sal Arnuk, the head of Themis Trading, which has its trading floor in Chatham, N.J. “We have been busy this morning.”

The concern about the U.S. credit rating was amplified when Standard & Poor’s announced Monday morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But traders said that much of the pessimism on Monday was a result of broader building concerns about the economy.

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