Makes Me Wana Holler,the way they do our lives.


U.S. stock futures sink, gold soars after S&P move

NEW YORK (MarketWatch) — U.S. stock-index futures slid sharply, Treasury prices rallied and gold futures topped $1,700 an ounce Monday as Wall Street readied to react to the unprecedented downgrade of U.S. debt by Standard & Poor’s.

The rating agency’s decision “is going to test the notion that ‘anticipated’ is always synonymous with ‘fully discounted’ in the world markets,” noted Nicholas Colas, chief market strategist at ConvergEx Group.

Futures on the Dow Jones Industrial Average DJ1U -0.50%  slumped 241 points to 11,161. Futures on the Standard & Poor’s 500 index SP1U -0.46%  dropped 28 points to 1,169.8 and those on the Nasdaq 100 ND1U -0.56%  sank 50 points to 2,137.

S&P downgrade: What’s the fallout?

Standard & Poor’s downgraded the U.S. government's AAA sovereign credit rating, an unprecedented action that looks like to send shock waves through the global financial system.

Late Friday, Standard & Poor’s downgraded the U.S. government’s AAA debt rating to AA+, and assigned it a negative outlook. The agency said the U.S. political system had become less stable and the deficit-reduction deal reached by lawmakers last week was not extensive enough. Read U.S. triple-A debt rating cut

“The downgrade was expected,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “As the first-ever [U.S. debt downgrade] announcement, it was taken as a shock, but I think it was pretty much priced into the marketplace.”

“Whether or not investors continue to choose to lower risk, I think that’s yet to be seen and I think the real basis for this huge decline has a lot to do with hedge-fund selling, which feeds on itself,” said Cardillo.

The Dow Jones Industrial Average DJIA -5.55%  fell 5.8% last week, its worst weekly performance since March 6, 2009, while the S&P 500 index SPX -6.66%  fell 7.2% on the week, its worst since late in 2008. The Nasdaq COMP -6.90%  finished the week down 8%, its worst since late 2008 as well.

News of the rating downgrade provoked sharp losses in Asia and the Middle East. Stocks in Europe also tumbled, with the Stoxx 600 XX:SXXP -4.14%  down 2% in early afternoon trading.

European stocks also slid, giving up gains that came after the European Central Bank said late Sunday it would “actively implement” its bond-buying program in an effort to calm market fears that the euro-area debt crisis will spread to Italy and Spain.

Financial markets seemed to pay little attention to a statement from the Group of 20 nations, which said Monday they stood ready to take “all necessary initiatives” to “ensure financial stability and liquidity in financial markets.” That follows a similar Group of Seven statement on Sunday. Read G-7 seeks to calm market's debt jitters

But Cardillo said there’s a good chance that U.S. stocks could reverse predicted losses later in the day “when the market begins to stabilize.”

Steen Jakobsen, chief economist at Saxo Bank, agreed. “People will start very, very defensively, but if the market keeps momentum into the close, you could see a rally in markets in New York,” said Jakobsen.

“But remember this is clearly a bear-market rally,” he added. “The policy response over the weekend was predictable and expected. What now remains is for policy makers to create more credibility by supporting the words with actions.”

Investors, clearly rattled by the S&P move, rushed to perceived safe-haven investments, such as gold. Gold futures for December delivery GC1Z +0.58%  rallied nearly $51.70 to $1,703.50 an ounce.

Crude-oil futures for September delivery CL1U -0.48%  fell $4.11 to $82.77 a barrel. Oil and energy-related stocks are often perceived as riskier investments.

Dollar Thrifty Automotive Group Inc. DTG -1.33%  said second-quarter net profit rose 0.6% to $42.5 million from $42.3 million as revenue fell 0.3%. Dollar Thrifty also said it doesn’t yet have an agreement on any merger terms with either Avis Budget Group Inc. CAR -11.77%  or Hertz Global Holdings Inc. HTZ +0.25% , though it continues to cooperate with both.

Shares of Berkshire Hathaway Inc. BRK.A -0.59%   BRK.B +0.15%  could be active. Late Friday, the company said second-quarter profit rose to $3.42 billion, or $2,072 per Class A share, from $1.97 billion, or $1,195 per Class A share, in the same quarter last year.

In merger news, a Berkshire Hathaway subsidiary offered to acquire all the outstanding common shares of Transatlantic Holdings Inc. TRH -0.79%  at a price of $52 each. Transatlantic’s board on Sunday advised its shareholders to take no action on the bid, and said it continues to recommend a stock-swap merger agreement struck in June between Allied World Assurance Co. Holdings AWH -1.39%  and Transatlantic.  

Kate Gibson is a reporter for MarketWatch, based in New York. Barbara Kollmeyer is an editor for MarketWatch in Madrid.

Views: 67

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by Cryptocurrency on August 9, 2011 at 12:04am
Lol @ Tara & Justin. Tara for the vid and Justin for the title.
Comment by Tara on August 8, 2011 at 7:57pm


"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted a blog post

When Will the True Reparations Be Awarded?

Americans have weathered the worst storm perhaps in American history from an intentionally…See More
8 hours ago
MAC posted videos
Tuesday
tjdavis posted photos
Tuesday
Doc Vega posted photos
Monday
Doc Vega posted a blog post

Veteran’s Day a Time That Should Be Honored

 At a time in our confusing and idiotic history when a Democrat can’t define a woman when being…See More
Monday
Michael A. Pinson posted a photo
Monday
cheeki kea commented on tjdavis's blog post Mountain Miracle
"Thumbs up to this awesome school. Isn't it amazing that some of the greatest teachers are to…"
Sunday
cheeki kea commented on cheeki kea's photo
Sunday
cheeki kea commented on Doc Vega's blog post This is Incredible! Trump is Already releasing Plans to Dismantle the Deep State and Purge the Corrupt Players
"Oh wow he is not wasting any time. May the power of the words he just spoke resonate across America…"
Sunday
tjdavis favorited cheeki kea's video
Sunday
tjdavis favorited rlionhearted_3's photo
Sunday
tjdavis posted a blog post
Sunday
Doc Vega's 4 blog posts were featured
Saturday
cheeki kea's 2 blog posts were featured
Saturday
Doc Vega commented on tjdavis's blog post Mountain Miracle
"A creative way to get hands on participation with students and the community."
Saturday
Doc Vega favorited tjdavis's blog post Mountain Miracle
Saturday
Doc Vega posted a blog post

The Perfect Lies

The Perfect Lies Time is like an ocean with its secrets running deepLike all the lovers you’ve…See More
Saturday
tjdavis posted blog posts
Saturday
tjdavis posted a blog post
Friday
Doc Vega posted blog posts
Nov 7

© 2024   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted