US shares continue down amid double-dip fears
Stocks tumble in the United States as investors respond to last week’s decision to cut the country’s AAA credit rating, prompting renewed concern over a possible double-dip US recession.
Worldwide, stocks fell to near 11-month lows, despite the European Central Bank decision to buy Italian and Spanish bonds.
More than 1,000 stocks traded on the New York Stock Exchange hit 52-week lows. By four o’clock GMT some 7 billion shares had been traded on the NYSE, the NYSE Amex and Nasdaq, making it the second busiest morning of 2011.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 30 to one.
The recent disagreement between Democrats and Republicans in the US Congress over the best way to extend the United States’ $14.3bn debt has driven jitters on stock markets across the globe.
Monday’s last-gasp agreement to raise the US debt ceiling failed to allay concerns about the weakness of the American economy, and on Friday the S&P credit ratings agency reduced the long-term US credit rating from AAA to AA+.
Entering a new financial world
On the floor of the New York Stock Exchange this morning, profound skittishness, writes Channel 4 News Economics Editor Faisal Islam. Mild panic right at the beginning, then the market settled down – but not out.
However, during the course of the day there were constant reminders of the new world that we’re in, with the vital government-backed mortgage companies Fanny and Freddie also downgraded.
The markets may not have crashed today, but they’re definitely down, and a sense here that we’re entering a new financial world. Traders are clinging on to evidence that US debt is still considered to be a safe haven, whatever Standard & Poor’s thinks.
But if anyone thought that this downgrade would be the wake-up call that American politicians needed, absolutely no sign of that at all. If anything, the disunited politics has turned into an entrenched blame game over S&P’s action – which, of course, makes a further downgrade even more likely.
And that’s why indices of fear, and the gold price, are surging.
