Crisis of Confidence in the Stock Market Resurfaces

Aug 8, 2011 by     Comments Off    Posted under: Headline, International Trade, Private Equity & Venture Capital, U.S. Policy

The downgrade of the USA‘s once-pristine triple-A credit rating got a failing grade from Wall Street on Monday, as stocks suffered their worst plunge since December 2008, leaving the fragile stock market on the brink of another bear market.

 

Jason Blatt of Knight Capital Americas reacts to down market on the floor of the New York Stock Exchange Monday.The fallout from the nation’s first-ever downgrade to AA+ hit global stock markets hard Monday in the first day of trading since rating agency Standard & Poor’s made the U.S. pay for the federal government’s inability to agree on a credible plan to rein in its spiraling deficit.

Investors in Asia, Europe and the USA all fled risky stocks in panic selling as news of the downgrade, coupled with the ongoing debt crisis in Europe and recent signs of a slowing economy, sapped the confidence of investors.

The Standard & Poor’s 500-stock index fell 6.7% Monday, extending its loss from its April 29 bull market high to 17.9%. That steep, sudden and scary drop has reopened the psychological wounds investors suffered … read original article here.

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