Dow Closes Down 634 Points After Downgrade Of U.S. Credit Rating
NEW YORK (CBSNewYork/AP) -- The U.S. stock market joined a sell-off around the world Monday in the first trading since Standard & Poor's downgraded American debt.
The Dow Jones Industrial Average closed down 634 points Monday and fell below 11,000 for the first time since November. The sharp drop extended Wall Street's almost uninterrupted decline since late July, when the Dow was flirting with 13,000.
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Treasury prices rose -- despite S&P's assessment that they were a riskier investment than the debt of some other countries like Canada and France. Investors still view Treasurys as one of the world's few safe havens from turmoil in other financial markets like stocks or commodities.
Investors also flocked to the safety of gold -- the precious metal blasted through $1,700 an ounce to an all-time high.
Standard & Poor's blamed Washington for not doing enough to cut the nation's debt and get its finances in order. It also warned that another downgrade could be on the way. President Barack Obama blamed the downgrade on political gridlock, saying we can't reduce the debt without raising taxes and cutting Medicare.
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President Obama renewed a plea to Congress to take action in September and help create jobs and cushion Americans from a still weak economy.
With the U.S. economy in crisis exchanges in Asia, Australia, and New Zealand fell several points after opening Monday morning. Asian markets were also down in early trading on Tuesday.
Obama said financial markets around the world "still believe our credit is triple A. I and the world's investor's agree."
For the first time in history, Standard and Poor's announced late Friday that it downgraded the U.S. AAA credit rating, forcing banks to staff trading desks over the weekend and sending the White House into a full court press to calm nerves.
The credit agency blamed the move on the debt ceiling deal, saying it didn't go far enough to get the nation's finances in order.
The news of the downgrade came at the end of a roller coaster week for the economy -- following the debt deal vote, the Dow's biggest single drop since the height of the economic crisis in 2008, and unemployment dipping to 9.1 percent.
Investors already concerned about a weak U.S. economy and Europe's debt problems are now pulling their money out of the stock market, but some traders said it may a needed wake-up call.
"I think this credit rating cut actually, in a perverse way, S&P did this country and perhaps the world a favor," trader Ted Weisberg told CBS 2's Alexis Christoforous.
More than 1,000 stocks on the New York Stock Exchange hit 52-week lows. U.S. markets have lost well over $1 trillion in value in just the past 11 trading days.
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