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Dow plunges 635 points as downgrade fuels market turmoil

August 9, 2011 Comments off

thehill.com

The Dow Jones Industrial Average closed down 635 points Monday, dropping below 11,000 as the impact of an unprecedented downgrade to the U.S. credit rating reverberated through financial markets.

The downturn came on the heels of a brutal week for the market, capped off when the Dow lost 512 points on Thursday. That gave the blue-chip stock index two of its 10 biggest point losses in the last three trading days.

The S&P 500 and NASDAQ stock indices were both down nearly 7 percent at the close of Monday’s trading.

The dramatic point drops followed the first-ever downgrade of United States debt by Standard & Poor’s late Friday evening. The credit rating agency, citing increasing concern over the nation’s political infighting and the relatively small amount of deficit reduction included in the deal to raise the debt limit, knocked America down from its top rating for the first time, moving it down one notch to AA+.

In an ironic twist, the financial product that was downgraded reaped the Read more…