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U.S. markets fall sharply, Dow down more than 450

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Published : Aug. 9, 2011 - 09:35

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 NEW YORK (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 fell more than 450 points in afternoon trading. 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.

Trader Andrew Stavros reacts after the close of trading in the NASDAQ, 100 Index pit, on the floor of The CME Group Monday, Aug. 8, 2011, in Chicago. (AP-Yonhap News) Trader Andrew Stavros reacts after the close of trading in the NASDAQ, 100 Index pit, on the floor of The CME Group Monday, Aug. 8, 2011, in Chicago. (AP-Yonhap News)

The yield on the 10-year Treasury note fell to 2.35 percent from 2.57 percent late Friday. A bond's yield drops when its price rises. The 10-year note's yield fell as low as 2.06 percent in 2008.

“Other AAA-rated sovereign debt issues are arguably in worse condition than the United States,” said Bill Stone, chief investment strategist for PNC Financial. He pointed to the AAA-rated United Kingdom and France. Relative to the size of their economies, both have higher debt loads than the United States. The dollar's status as the reserve currency for the world also helps keep investors coming back to Treasurys.


Monday was the first chance for global investors to respond to S&P's announcement late Friday that it was reducing its credit rating for long-term U.S. government debt by one notch, from AAA, the highest rating, to AA+.

The move wasn't a total surprise but came when investors were already feeling nervous about a weak U.S. economy, European debt problems and Japan's recovery from its March earthquake.

Fresh memories of the financial crisis three years ago are also driving investors away from risky investments and into what's considered safer.

“Fear of a repeat of 2008 is what's really driving investments,” said Gary Schlossberg, senior economist with Wells Capital Management.

In other trading on Wall Street, the S&P 500 index fell 60 points, or 5 percent to 1,139. The Nasdaq composite index fell 126 points, or 5 percent, to 2,407. The Dow was at 11,009, down 3.8 percent.

Last week, the Dow Jones industrial average fell almost 700 points. That was its biggest point loss since October 2008, during the financial crisis. The Dow has dropped in nine of the last 11 trading days.

The S&P 500 is already down 11 percent so far in August. If it stays down just that much, it would be the worst month for the index since October 2008.

Stock markets in Asia began the global rout. The main stock index fell almost 4 percent in South Korea and more than 2 percent in Japan. European markets opened later and fell, too, with Germany down 5 percent and France 4.7 percent.

Gold, considered to be a safe investment, rose more than $70 per ounce, to $1,721. Monday was the first time gold was above $1,700 although after adjusting for inflation, its price remains below its 1980 record. At that time an ounce cost about $2,400 in today's dollars.

Gold began the year at $1,421.40. It has climbed steadily as worries rose about high debt levels in both Europe and the United States. It went above $1,500 per ounce in late May.

Moody's, another of the other key credit-rating agencies, on Monday stood by its top Aaa rating for the United States. It said it could downgrade the U.S. if it doesn't improve its long-term finances by cutting its deficit, “but it is early to conclude that such measures will not be forthcoming.”

Standard & Poor's also on Monday downgraded the credit ratings of mortgage lenders Fannie Mae, Freddie Mac and other agencies linked to long-term U.S. debt. Fannie and Freddie own or guarantee about half of all U.S. mortgages. Their downgrade could mean higher mortgage rates for consumers.

Worries about weaker profits that could result from a slowing economy have slammed the financial industry since late July. As a group, financial stocks in the S&P 500 index fell 4.9 percent on Monday to their lowest level since July 2009.

Bank of America Corp. has been the hardest hit. It fell 13.7 percent after AIG filed suit against the bank. The insurer alleged Bank of America sold it overvalued mortgage-backed securities. The bank denied the allegations. Its stock has dropped by nearly 50 percent this year.

Stocks in other industries whose profits are closely tied to the strength of the economy also fell sharply. Energy stocks in the S&P 500 fell 4 percent, for example.

<한글 기사>

美경제 시계제로..주가폭락

 
8일(현지시각) 뉴욕증시는 유로존 위기에 대한 불확실성이 지속되는 가운데 미국 국채의 신용등급 강등이 향후 경제 전망을 시계제로 상태로 몰아 넣으면서 주가가 폭락했다.

이날 뉴욕증권거래소(NYSE)에서 다우존스 산업평균지수는 지난 주말 종가보다 634.76포인트(5.55%) 하락한 10,809.85에서 거래를 마쳤다. 지난 2일 심리적 저지선 인 12,000선이 뚫린 지 4거래일 만에 11,000선마저 무너져 내렸다.

기술주 중심의 스탠더드 앤드 푸어스(S&P) 500 지수도 79.92포인트(6.66%) 내린 1,119.46에, 나스닥 종합지수는 174.72포인트(6.9%) 하락한 2,357.69에 각각 장을 마감했다.

신용평가사들의 미국 국채에 대한 신용등급 강등 조치와 강등 가능성 경고로 ` 위험자산'에 대한 투자자들의 심리가 완전히 얼어붙었다. 신용등급 강등이 이미 예상됐고 시장에도 일부 반영됐을 것이라는 기대는 무참히 깨졌다.

S&P는 지난 5일 미국이 부채상한 증액 협상을 타결했지만 재정적자를  줄이는데 는 충분치 못한 결정이라고 평가해 미국의 국가 신용등급을 기존 `AAA'에서 `AA+'로 한 단계 낮췄다. 

이날도 후속조치로 미국의 국책 모기지기관인 패니메와 프레디맥, 증권관련 4개 공공기관들의 신용등급을 기존 'AAA'에서 'AA+'로 한단계 하향조정했다. 아울러 미국계 보험사 5곳의 신용등급도 기존 'AAA'에서 'AA+'로 조정하고 신용등급 전망도 '부정적(Negative)'으로 부여했다.

니메와 프레디맥은 정부 보증을 근거로 일반인들에게 주택담보대출(모기지)을 제공하는 금융기관으로 미국 모기지 시장의 90% 가량을 차지하고 있다.

다른 신용평사가인 무디스가 이날 미국의 신용등급을 그대로 유지한다고 발표한 것도 투자자들의 불안 심리를 잠재우는데 아무런 도움이 되지 못했다.

무디스는 미국 국채의 신용등급을 기존 `AAA'로 계속 유지할 방침임을 재확인하면서도, 재정적자 감축 후속조치가 믿을만하지 못하면 조기에 신용등급을 내릴 것이 라고 경고, 불안 심리를 오히려 부채질했다.

버락 오바마 미국 대통령은 성명을 통해 "일부 신용평가기관이 뭐라고 하든 우리는 언제나 `AAA등급' 국가였고 앞으로도 그럴 것"이라며 사태 수습에 적극 나섰지 만 시장의 불안을 해소하기에는 역부족이었다.

S&P의 이번 조치로 시장에서는 미국의 더블딥(이중침체) 우려가 더욱 커졌다.  

미국의 국가 신용등급 하락이 달러화의 구매력 저하로 이어지고 물가 상승압력이 높아져 다시 침체에 빠질 것이라는 관측이다.

이날 시장에서는 최근의 잇단 악재에 따른 충격을 단기적으로 딛고 일어설 것이 라는 기대보다는, 바닥을 도무지 예측하기 힘들게 된 가운데 팔자 행렬이 장기화될 것이라는 비관론이 팽배했다.  (연합뉴스)