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Dow closes below 11,000

  |   Aug. 8, 2011 at 4:46 PM
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NEW YORK, Aug. 8 (UPI) -- U.S. stock indexes retreated Monday in reaction to the downgrade of the U.S. credit rating, with the Dow Jones industrial average losing more than 600 points.

The Dow closed at 10,812.27, off 632.34 points, or 5.53 percent, in a sell-off during the first New York Stock Exchange floor session since Standard & Poor's announced it downgraded the U.S. credit rating from AAA to AA+. It was the first time the DJIA closed below 11,000 in months.

The Nasdaq posted a 174.72-point loss, or 6.9 percent, to end the session at 2,357.69.

The Standard & Poor's 500 shed 79.86 points, or 6.66 percent, to close at 1,119.53.

President Obama sought to reassure U.S. and global audiences that the United States was strong and that its deficit problems were "imminently solvable."

He also said he thought the downgrade could provide a "renewed sense of urgency" for congressional Democrats and Republicans to address deficit reduction.

He said he would be providing his recommendations in the coming weeks to a bipartisan congressional committee tasked with finding ways to reduce the deficit by at least $1.5 trillion in the next decade.

But his comments that the United States "would always be AAA" did little to assure investors.

"The market's telling [Washington] right now that we don't think that you can get your spending under control," Dave Kavanagh, president of the Grant Park Fund in Chicago, told The Wall Street Journal.

Before Monday's market activity, the New York Stock Exchange invoked the little-used "Rule 48," which lets market makers refrain from disseminating price indications ahead of the bell, making it easier and faster to open trading in the stock market.

Some investors said they were concerned about the strength of the global economy as much if not more than credit ratings, the Journal said.

"The market is probably more concerned with the economic risk than with the S&P credit rating," said Bernie McDevitt, vice president of institutional trading at Cheevers & Co.

The listed volume on the NYSE was 3.48 billion shares, with 42 stocks advancing and 3,030 declining.

The 10-year treasury note was yielding 2.35 percent.

The euro was $1.4183 Monday from $1.4266 Friday. Against the yen, the dollar was 77.61 yen from 78.43 yen Friday.

In London, the FTSE closed at 5,068.95, off 178.04 points, while the German Dax lost 312.89 to close at 5,923.27.

Brazil's Bovespa dropped 4,270.12 to 48,679.10 and Canada's S&P/TSX lost 491.21 to close at 11,670.96.

In Tokyo, the Nikkei Average lost 202.32 points to close at 9,097.56.

Stock prices on Asian exchanges fell Monday, extending their losses from Friday.

In Hong Kong, the blue-chip Hang Seng Index dropped 456 points, or 2.2 percent, to finish the day at 20,491 points.

Both Japan and China have huge holdings of U.S. treasuries.

Korea's KOSPI index closed 3.8 percent after plunging more than 5 percent during the day. Also closing lower were Australia's All Ordinaries (2.7 percent), Shanghai Composite (3.8 percent), Singapore (3.7 percent), Taiwan (3.8 percent) and Indonesia (1.82 percent).

Most analysts, reacting to the S&P decision and other recent developments, have said market reaction around the world would be marked by volatility at least in the near term because of concerns about the potential for a double-dip recession in the United States and the debt crisis in Europe.

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