8
Aug

Dow Plunges More Than 600 in Sell-Off

Written on August 8, 2011 by Ángeles Figueroa-Alcorta in Americas, Globalization & International Trade, Political Economy

By Christine Hauser

A roller-coaster session on Monday ended up being the worst day for Wall Street in more than two years.

Investors, already concerned about the economy, saw their first opportunity on Monday to shave their portfolios of the assets they viewed as risky. The dropoff comes as the markets struggled to work out the implications of Standard & Poor’s unprecedented downgrade of the nation’s long-term debt Friday night after the markets had closed.

At the close of trading, it turned out to be the worst daily decline for the S.& P. 500-stock index and the Dow Jones industrial average since Dec. 1, 2008. All 500 stocks in the S.& P. fell on Monday; the index ended the day down 79.92 points, or 6.66 percent, at 1,119.46.

The Dow Jones was down 634.76 points, or 5.55 percent at 10,809.85. Its one-day decline is its steepest point loss in a single day since December 2008. The Nasdaq dropped 174.72 points, or nearly 7 percent, to 2,357.69.

“There is a lot of fear out there,” said Laura LaRosa, director of fixed income at the investment firm Glenmede. “The sell-off was massive.”

As investors sought safer places to put their money, stocks were sent plummeting. Gold rose, and many even flocked to government bonds, which held up as a haven.

“Fear is rampant in the market right now, the fear that we will have a double-dip recession,” said Brian M. Youngberg, the energy analyst for Edward Jones. “It is too early to call that, but once the fear bubbles up it can treat the market very harshly.”

S.& P. had warned investors earlier this year that it would act if Congress did not agree to increase the government’s debt ceiling, basically a borrowing limit, and adopt a long-term plan for reducing its debts by at least $4 trillion over the next decade. Read more…

As published in The New York Times on August 7, 2011.

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