Breaking: Dow Jones plummets over 600 points on market close
NEW YORK-- Here in San Francisco, the breaking news has just come in that the U.S. stock market is down over 600 points. That's because the US has joined a sell-off taking place around the world on Monday, the first day of trading since S&P went ahead and downgraded American debt.
San Francisco resident, Alex Waverly, said, "This will definitely have an impact on investors here in San Francisco and around the globe."
San Francisco residents are being told that The Dow Jones Industrial Average dropped over 600 points in trading in the afternoon. One surprise is that Treasury prices rose, although S&P had maintained they were a riskier investment than the current debt of some countries like Canada or France. Treasurys are often seen as safer investments than stocks or commodities, says San Francisco news station, ABC 7 News.
Yield fell on the 10-year Treasury note from a previous 2.57 percent to 2.35 percent. It's worth noting that in 2008, the yield on a 10-year note went down to just 2.06 percent.
"Other AAA-rated sovereign debt issues are arguably in worse condition than the United States," stated Bill Stone to ABC 7 News. Stone is the chief investment strategist for PNC Financial.
Stone added that in the AAA-rated countries of United Kingdom and France, the debt loads are higher than in the USA. San Francisco residents should know that it's because the dollar is the reserve currency for the world, that investors always come back to Treasury notes.
S&P said on Friday that it was lowering the credit rating for the U.S. government's long-term debt from AAA to AA+. Today global markets have reacted to that announcement. (Interested in how the Asia market did? See this article here: SF learns how Asia stocks did after US recession...)
Because investors are aware of a weak economy in the USA, the problems going on in Europe, and the recovery after the March earthquake in Japan, they are opting for safe places to put their money.
"Fear of a repeat of 2008 is what's really driving investments," said Gary Schlossberg, senior economist with Wells Capital Management, according to ABC 7 News.
See the follow-up article on this story here, with video. Dow closes under 11,000, over 600 points lost (video)
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