Stocks collapsed Monday as investors reacted to the first downgrade of U.S. government’s debt by Standard & Poor’s, and as fears of another recession intensified.
The Dow Jones industrial average plunged 634.76 points, or 5.5 percent, to close at 10,809.85. It was the Dow’s biggest one-day drop since the dark days of December 2008.
The Nasdaq index plummeted 6.9 percent, the S&P 500 fell 6.7 percent and oil was down 7.4 percent. The only winner was gold – it rose 4 percent to top $1,700 an ounce for the first time.
“People are very, very nervous,” said Carl Domino, a money manager in Palm Beach.
Across the Atlantic, policymakers struggled to contain a debt crisis of their own. The threat of default has spread from relatively small countries like Greece and Portugal to bigger ones like Italy and Spain. If those countries failed to meet their debt payments, Italian and Spanish banks would absorb losses on their holdings of their countries’ government bonds.
