AntZ
08-08-2011, 06:56 PM
Dow Dives 500, BofA Sinks 20%; Vix Soars 45%
Posted By: JeeYeon Park | CNBC.com Writer
| 08 Aug 2011 | 02:53 PM ET
Stocks accelerated their selloff in heavy volume Monday as investors fled from risky assets following S&P's downgrade of U.S.'s credit rating last week in addition to ongoing uncertainty over the euro zone crisis.
The Dow Jones Industrial Average dropped sharply to break below the psychologically-significant 11,000 mark, led by BofA and Alcoa , after logging its steepest weekly decline since Mar. 2009 last week. The blue-chip index sank as many as 605 points in its session low.
The S&P 500 and the tech-heavy Nasdaq were down more than 5 percent. August is already on track to be the worst day for both indexes since Oct. 2008.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, spiked above 40 to touch its highest level since Mar. 2009.
All 10 S&P sectors were lower, led by energy, banks and industrials. The industrial and financial sectors are down over 20 percent since the market's April highs.
“Once we took out Friday’s lows, it was like a trapdoor opened,” Art Cashin, director of floor operations at UBS Financial Services told CNBC. “This is very heavy volume again and that tells me that we’ve got people liquidating to raise cash.
Moody's said it has doubts over the long-term enforceability of the budget cuts already decided by Congress. The agency also warned that it could downgrade if the U.S. economy falters and the current deficit plan fails to produce "credible" results.
In its latest move meanwhile, Standard & Poor's also lowered Fannie Mae, Freddie Mac and Federal Home Loan Bank's debt to AA-plus from AAA.
In addition, the agency's move to cut U.S.'s long-term debt rating to AA-plus from AAA came late Friday after a wild week for stocks—its worst in more than two years—as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies hit sentiment.
Cramer: Scary, But This Is NOT 2008
S&P came in for significant criticism from U.S. Treasury Secretary Timothy Geithner said the rating agency showed "terrible judgment" in lowering the U.S. government’s credit rating.
Meanwhile, President Obama said financial markets around the world "still believe our credit is AAA and the world's investors agree," but his speech did little to cheer up the market.
Obama also renewed a plea to Congress to take action in September of help create jobs and cushion Americans from a still weak economy.
Poll: Are You Changing Your Asset Allocations Because of the Downgrade?
David Beers, global head of sovereign ratings at S&P, defended the firm's position, despite the discovery of a $2 trillion error in the firm's calculation of the projected debt to GDP ratio for the U.S.
Meanwhile, S&P also revised Berkshire Hathaway's rating outlook to "negative" from "stable."
Incidentally, this comes after Warren Buffett said S&P's downgrade of the U.S. "doesn't make sense" and told CNBC he was not changing his mind about Treasurys based on S&P's downgrade.
Meanwhile, U.S. light, sweet crude fell sharply to settle at $81.31 a barrel, the lowest level since Nov. 2010. Gold surged to a record high above $1,700 an ounce as investors flocked to the precious metal as a safe-haven play. JPMorgan said gold prices could soar as much as $2,500 an ounce by year-end on "very high" volatility. Gold miners were trading higher, led by Newmont Gold and Anglogold .
Slideshow: 10 Commodities with Biggest Price Moves
Bank stocks led the market deep into the red, led Bank of America , which sank more than 15 percent. AIG said it planning to sue the bank to recover more than $10 billion in losses on $28 billion of investment in mortgage-backed securities.
Meanwhile, widely-followed hedge fund manager David Tepper of Appaloosa Management said he is selling out his BofA and Wells Fargo stakes and decreasing his position on Citigroup . (Read More: Tepper's Appaloosa Exits Financials) And influential financial analyst Mike Mayo downgraded BofA stock to underperform from outperform.
Genworth Financial and Regions were also down more than 10 percent.
Verizon declined after almost 45,000 employees went out on strike over the weekend amid a contract dispute.
McDonald's slipped even after the fast-food chain posted a 5.1 percent sales gain at established stores.
Coca-Cola toggled in and out of positive territory after Goldman Sachs added the beverage giant to its "conviction buy list." And P&G was the only Dow gainer after Bernstein upgraded the consumer goods manufacturer to "outperform" from "market perform."
Warren Buffett's Berkshire Hathaway unit made a $3.24 billion buyout offer for Transatlantic Holdings , topping two existing rival bids from Allied World Assurance Company and Validus . Meanwhile, Keefe, Bruyette & Woods raised its rating on Berkshire Hathaway to "outperform" from "market perform."
European shares sank finish at two-year lows, despite an announcement from the European Central Bank that it was entering the bond market to buy Italian and Spanish sovereign debt.
Posted By: JeeYeon Park | CNBC.com Writer
| 08 Aug 2011 | 02:53 PM ET
Stocks accelerated their selloff in heavy volume Monday as investors fled from risky assets following S&P's downgrade of U.S.'s credit rating last week in addition to ongoing uncertainty over the euro zone crisis.
The Dow Jones Industrial Average dropped sharply to break below the psychologically-significant 11,000 mark, led by BofA and Alcoa , after logging its steepest weekly decline since Mar. 2009 last week. The blue-chip index sank as many as 605 points in its session low.
The S&P 500 and the tech-heavy Nasdaq were down more than 5 percent. August is already on track to be the worst day for both indexes since Oct. 2008.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, spiked above 40 to touch its highest level since Mar. 2009.
All 10 S&P sectors were lower, led by energy, banks and industrials. The industrial and financial sectors are down over 20 percent since the market's April highs.
“Once we took out Friday’s lows, it was like a trapdoor opened,” Art Cashin, director of floor operations at UBS Financial Services told CNBC. “This is very heavy volume again and that tells me that we’ve got people liquidating to raise cash.
Moody's said it has doubts over the long-term enforceability of the budget cuts already decided by Congress. The agency also warned that it could downgrade if the U.S. economy falters and the current deficit plan fails to produce "credible" results.
In its latest move meanwhile, Standard & Poor's also lowered Fannie Mae, Freddie Mac and Federal Home Loan Bank's debt to AA-plus from AAA.
In addition, the agency's move to cut U.S.'s long-term debt rating to AA-plus from AAA came late Friday after a wild week for stocks—its worst in more than two years—as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies hit sentiment.
Cramer: Scary, But This Is NOT 2008
S&P came in for significant criticism from U.S. Treasury Secretary Timothy Geithner said the rating agency showed "terrible judgment" in lowering the U.S. government’s credit rating.
Meanwhile, President Obama said financial markets around the world "still believe our credit is AAA and the world's investors agree," but his speech did little to cheer up the market.
Obama also renewed a plea to Congress to take action in September of help create jobs and cushion Americans from a still weak economy.
Poll: Are You Changing Your Asset Allocations Because of the Downgrade?
David Beers, global head of sovereign ratings at S&P, defended the firm's position, despite the discovery of a $2 trillion error in the firm's calculation of the projected debt to GDP ratio for the U.S.
Meanwhile, S&P also revised Berkshire Hathaway's rating outlook to "negative" from "stable."
Incidentally, this comes after Warren Buffett said S&P's downgrade of the U.S. "doesn't make sense" and told CNBC he was not changing his mind about Treasurys based on S&P's downgrade.
Meanwhile, U.S. light, sweet crude fell sharply to settle at $81.31 a barrel, the lowest level since Nov. 2010. Gold surged to a record high above $1,700 an ounce as investors flocked to the precious metal as a safe-haven play. JPMorgan said gold prices could soar as much as $2,500 an ounce by year-end on "very high" volatility. Gold miners were trading higher, led by Newmont Gold and Anglogold .
Slideshow: 10 Commodities with Biggest Price Moves
Bank stocks led the market deep into the red, led Bank of America , which sank more than 15 percent. AIG said it planning to sue the bank to recover more than $10 billion in losses on $28 billion of investment in mortgage-backed securities.
Meanwhile, widely-followed hedge fund manager David Tepper of Appaloosa Management said he is selling out his BofA and Wells Fargo stakes and decreasing his position on Citigroup . (Read More: Tepper's Appaloosa Exits Financials) And influential financial analyst Mike Mayo downgraded BofA stock to underperform from outperform.
Genworth Financial and Regions were also down more than 10 percent.
Verizon declined after almost 45,000 employees went out on strike over the weekend amid a contract dispute.
McDonald's slipped even after the fast-food chain posted a 5.1 percent sales gain at established stores.
Coca-Cola toggled in and out of positive territory after Goldman Sachs added the beverage giant to its "conviction buy list." And P&G was the only Dow gainer after Bernstein upgraded the consumer goods manufacturer to "outperform" from "market perform."
Warren Buffett's Berkshire Hathaway unit made a $3.24 billion buyout offer for Transatlantic Holdings , topping two existing rival bids from Allied World Assurance Company and Validus . Meanwhile, Keefe, Bruyette & Woods raised its rating on Berkshire Hathaway to "outperform" from "market perform."
European shares sank finish at two-year lows, despite an announcement from the European Central Bank that it was entering the bond market to buy Italian and Spanish sovereign debt.