WASHINGTON — Shrugging off pleas for calm from President Barack Obama, stocks plunged Monday on the first day of trading since Standard & Poors downgraded the U.S. credit rating. The broad selloff hit all three major indices and the oil markets.
The Dow Jones Industrial closed down more than 634 points, or 5.55 percent, to close at 10,809.85, well below the psychological threshold of 11,000. The S&P 500 was down 79.92, almost 6.67 percent, to finish at 1119.46. The Nasdaq skidded down 174.72 points, or 6.90 percent, to 2357.69.
In a bright spot for weary U.S. motorists, but also a reflection on fears of a slide back to recession, crude oil prices on the New York Mercantile Exchange fell $5.57, or 6.4%, to settle at $81.31 a barrel for next-month delivery. Thats a stunning drop from the $98 a barrel just a few weeks ago in late July.
Mondays awful day in global financial markets heightens pressure on the Federal Reserve, whose rate-setting Open Market Committee meets on Tuesday and is expected to take some steps toward reassuring markets.
The Fed is expected at minimum to change the wording of its statement following the meeting to signal markets that lending rates will be held at near zero for an even longer time than has been anticipated.
This should provide a psychological boost but may have little direct consequence for Americans suffering in an economy struggling to keep its forward momentum.
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