Stocks suffer sharpest drop since 2008 - New York Times

The Dow Jones industrial average fell 634 points or 5.6 per cent and the standard & poor's 500 - index deleted 6.7 percent, the biggest retreat since December 2008 in the financial crisis, accelerated a sell-off that began a few weeks. The S. & p. 500 is now up 18 percent of his April 29 Summit and approaching official bear market territory, defined as a case of 20 percent.

So concerned, many investors are that she poured money in government bonds, sold the debt of the Government to finance its operations. Although the rating agency standard & poor United States downgraded a debt score of Sterling AAA rating on Friday, judge it a slightly higher risk than, many more secure than any other investment still consider treasuries.

Typically, a downgrade to sell investors, but turmoil in financial markets in Europe and political gridlock in Washington would /og concerns downgrade. "This is investors from risk run they are, see where it", said David Kelly, Chief market strategist at JPMorgan funds. "The greatest danger that we have here is recession."

Has picked up sell-off speed, although President Obama trying to calm the markets told reporters that "our problems are eminently solvable and we know what we need to do to solve it." There is however sharp disagreement known to solve they like by the fierce partisan battle over the increase in the Federal Government's borrowing limit was dissolved only by a last-minute compromise.

After the financial collapse more than two years ago, the Government took out several steps to the economy, pouring money into the financial system and to the adoption of stimulus spending to revive. Some economists say they think more stimulus spending now is required to make sure that the economy will slow further, but this seems unlikely given the fact that many Republicans say that the country can ill afford the gaping budget deficit with more outputs added.

It was not only the stock market was rattled. Also signs of some stress showed some obscure, but important parts of the credit market. For example, paper of the commercial market, short-term loans with which enterprises finance less favorable, was. This was not nearly as bad as during the financial crisis, but people keep an eye on this, if conditions worsen.

"The cause of all was the marking this after growth expectations," strategist at Barclays Capital said Barry Knapp. "It has changed recession concerns in a global giant growth." The trading day opened ominously in the United States after fall sharp of stocks in Asia and Europe. The European Central Bank is trying to calm investors by aggressive bond markets with special measures to support financially troubled Spain and Italy, little success.

On the floor of the New York Stock Exchange Doreen Mogavero, a trader for Mogavero, Lee & company, notes that holiday in anticipation of a wild day had canceled other traders. Additional staff was on duty to ensure that computer systems were working correctly as volume increased.

The Exchange processes a record 390 million orders in the first hour of trade, eclipsing the last record in May 2010. All stock exchange gehandelten in all 18 billion shares on the nation, the most active day in a year.

Many investors - by the relentless decline in stocks in the months following the 2008 financial collapse burned - seem inclined to sell, rather than to wait. "It is the psychological impact of I am worried over confidence in the market," said Mrs Mogavero.

The power of the stock market sell-off that has - accelerated in the last two weeks, the wider S. & p. 500-stock index 16.8% 22 - lost since July is the creation of the growing sense that the economy a double-dip recession as everyone from consumers, company Retrench approaches can be.

The largest decreases were recorded in Bank shares. Bank of America fell 20 percent. Citigroup fell 16 percent. Morgan Stanley fell by 14 percent. JPMorgan fell 9 percent. And Goldman Sachs fell 6 percent.

Investors fear that banks of the economic slowdown could be affected and that with government spending, lenders would less likely be, that received public support in the future they it, if need, such as during the financial crisis action.

There was little positive news to calm investors. Standard & poor's, the rating agency, which took the latest uncertainty unleashed more action on Monday. It was a variety of financing entities that are by the Federal Government, including Fannie Mae and Freddie Mac, the two housing of giants in the middle of the country's mortgage market, thanks to the support get backed them by the Federal Government.

Contributed, Christine Hauser, Nelson D. Schwartz, Andrew Ross Sorkin and Helene Cooper have coverage.


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Stocks suffer sharpest drop since 2008 - New York Times