Thursday, August 04, 2011

That Debt Ceiling Deal Was So Great That Dow Jones Lost All Gains For The Year

512 points.

That's how far the stock market fell today, in the biggest loss on Wall Street since 2008 (Yahoo News).

Gripped by fear of a new recession, the stock market suffered its worst day Thursday since the financial crisis in the fall of 2008. The Dow Jones industrial average fell more than 500 points, its ninth-steepest decline.

The sell-off wiped out the Dow's remaining gains for 2011. It put the Dow and broader stock indexes into what investors call a correction — down 10 percent from their highs in the spring.

"We are continuing to be bombarded by worries about the global economy," said Bill Stone, the chief investment strategist for PNC Financial.

Across the financial markets, the day was reminiscent of the wild swings that defined the financial crisis in September and October three years ago. Gold prices briefly hit a record high. Oil fell even more than stocks — 6 percent, or $5.30 a barrel. And frightened investors were so desperate to get into some government bonds that they were willing accept almost no return on their money.

The unemployment stats for July are coming out tomorrow, so I'm sure that weighed heavily on the minds of investors. Couple that with the fact that, thanks to this debt ceiling deal, we're now borrowing 100 percent of our gross domestic product.

And to think we were told it would be the end of the world if we did not raise the debt ceiling. JammieWearingFool even found a story from last month saying stocks would fall if the debt ceiling wasn't raised.

Well, it was raised and look what happened anyway!

No comments: