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Horror as US markets plummet

Aug 08 2011 22:20 Sapa, AFP and Reuters

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New York - US stocks plummeted more than five percent on Monday, with the Dow Jones Industrial Average losing 625 points in the wake of Standard & Poor's unprecedented downgrade of the United States.

The Dow was down 5.5% to 10 813.26 in closing trade, its lowest close since last October. It was the steepest one-day drop in point terms since the financial crisis of 2008. The broader S&P 500 fell 6.6% and the tech-heavy Nasdaq dropped 6.9%.

JPMorgan Chase fell 9.4%, while American Express closed the day 8.8% down.

Bank of America plunged an eye-popping 20.3% after it was hit with a $10.5bn lawsuit from insurer AIG over its sales of faulty mortgage-backed securities prior to 2008.

The Brazil stock exchange plunged 8.0% - the largest in South America - at closing Monday, hit hard by steep falls in Europe and the US.

Other world stocks slid to near 11-month lows overshadowing relief that the European Central Bank was buying Italian and Spanish government bonds in the latest move to staunch the eurozone debt crisis.

The price of gold topped $1 700/oz as investors fled to safe-haven assets. The Swiss franc and the yen soared against the dollar and euro. Traders said the European Central Bank bought Spanish and Italian debt early in the European session after it said on Sunday it would “actively implement” its bond-buying program.

That helped lift the euro to a high of $1.4432 earlier. But the ECB purchases did little to alleviate concern the eurozone’s debt crisis is moving into core countries.

South Africa’s index of blue chips, the Top-40, closed 3.13% lower, booking its lowest finish since September 2010. Share prices have not escaped the hammering that has hit other global stock markets as investors spooked by debt worries in Europe and a United States ratings downgrade flee for less risky assets such as gold


markets  |  us debt default

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