Dow skids 600, worst day since credit crisis

The Dow closed down 634 points, the S&P 500 lost 79 points, and the Nasdaq ended 174 points lower. For every stock that rose at the New York Stock Exchange, more than 69 fell.

By JeeYeon Park, CNBC.com

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Stocks took a sharp nosedive in another choppy day Monday to finish at session lows as investors fled from risky assets following S&P's downgrade of U.S.'s credit rating last week in addition to ongoing economic jitters.

The Dow Jones Industrial Average plunged 634.76 points, or 5.55 percent, to finish at 10,809.85, well-below the psychologically-significant 11,000 mark. The move marks the blue-chip index's biggest point and percent drop since Dec. 1, 2008.

BofA and Alcoa were the top laggards on the index.

The S&P 500 plummeted 79.92 points, or 6.66 percent, to close at 1,119.46, its lowest close since Sept. 10, 2010.

Nasdaq sank 174.72 points, or 6.90 percent, to end at 2,357.69, its lowest close since October 4, 2010.

August is already on track to be the worst month for the S&P and Nasdaq 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 banks, energy and materials. Financials have plunged more than 20 percent this year.

?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 while they are maintaining the U.S.'s AAA status, the agency said it has doubts over the long-term enforceability of the budget cuts already decided by Congress.

This comes after Standard & Poor's move to downgrade U.S.'s rating to AA-plus from AAA last Friday after a wild week for stocks?its worst in more than two years.

And in its latest move, S&P also lowered Fannie Mae, Freddie Mac and Federal Home Loan Bank's debt to AA-plus from AAA.

S&P came in for significant criticism from U.S. Treasury Secretary Timothy Geithner, who 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," although his speech did little to cheer up the market.

Meanwhile, S&P also revised Berkshire Hathaway's rating outlook to "negative" from "stable."

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/QR7AWV9BnBo/Dow-skids-600-worst-day-since-credit-crisis

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