August 9, 2011
Wall Street gained ground and held on Tuesday morning, restoring a bit of hope for investors after another turbulent night for overseas markets and the steepest losses for U.S. indexes since 2008.
The Dow Jones industrial average,which closed below 11,000 Monday, climbed more than 200 points in the first 30 minutes of trading. The tech-heavy Nasdaq and Standard & Poor’s each surged more than 2 percent.
Those gains ebbed and flowed over the course of the morning, but all three indexes remained in positive territory as of 11:15 a.m.
Still, markets will have to gain substantially more to recover even a portion of Monday’s losses: The Dow lost 5.5 percent, the S&P lost 6.7 percent and the Nasdaq lost 6.9 percent, for a total loss of about $1.2 trillion of stock market value.
Overseas, Asian markets plummeted overnight Tuesday, although they recovered slightly before the close of trading. European markets opened sharply down, then gained ground, with all major indexes save Germany’s DAX gaining ground as of late afternoon.
U.S. government and business leaders are closely watching the volatility. Bruised by the recent battle over raising the debt limit and the country’s ongoing economic doldrums, policymakers must decide how best to reassure panicked investors.
The Federal Reserve’s policy committee has a regularly scheduled meeting at 2:15 p.m., and officials are likely to wrestle with whether and how to try and to boost economic growth.
President Obama has no public appearances scheduled. On Monday, he declared to reporters that the United States “always will be a triple-A country,” despite a decision by Standard & Poor’s to downgrade its credit rating last Friday--a decision that at least in part triggered Monday’s heavy sell-off.
The president said the downgrade reflected concern with the political paralysis the gripped Washington during the acrimonious debt debate. He called again for a combination of revenue increases and cuts in spending to reduce U.S. debt and deficits.
But Republican opponents immediately issued their own statements, blaming Obama for the struggling economy and saying they would not give in to pressure from the White House.
Monday’s stock market declines followed emergency action in the United States and Europe to help contain a debt crisis engulfing Italy and Spain, the continent’s fourth- and fifth-largest economies.
But the actions, and Obama’s reassurances, did not reverse the tide. At day’s end, the Dow had plunged 635 points, ending at 10,810, down about 5.6 percent. The Standard & Poor’s index tumbled 80 points to about 1120, down about 6.7 percent. The tech-heavy Nasdaq lost 175 points, ending the day at 2,358, down 6.9 percent.
In one positive sign for the United States, investors continued to flock to Treasury bonds as a safe haven for their money. The yield on 10-year Treasury bonds fell to 2.38 percent on Monday, from Friday’s close of 2.56 percent.