STOCKS DROP SHARPLY – AT 10:25 A.M. ET: The stock market has opened sharply lower, following S&P's downgrade of America's credit. From Bloomberg:
U.S. stocks retreated, following the biggest weekly drop in the Standard & Poor’s 500 Index since 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown.
Bank of America Corp. (BAC) and Citigroup Inc. (C) slumped at least 5.4 percent, pacing losses in financial shares. Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) declined more than 2.7 percent as oil futures tumbled to trade at an eight-month low.
The S&P 500 retreated 2.1 percent to 1,174.66 at 9:34 a.m. in New York, after losing 7.2 percent last week. The Dow Jones Industrial Average fell 197.92 points, or 1.7 percent, to 11,246.69.
“It’s panic selling,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $275 billion. “There are no fundamental reasons for the selloff. We’re not going into a recession. We had a terrific earnings season. Now is not the time to panic. This is where you start to put cash back to work.”
COMMENT: Volatility is expected throughout the day. The Wall Street economy is not the real, Main Street economy. As Felix Rohatyn, a true statesman of the financial sector, once said, it's something of a casino. We'll see who comes away with more chips.
It is now three days since the downgrade, and President Obama has yet to comment on it. His leadership, or lack of it, has got to be a factor in the economic decisions that people and corporations make. There's not much glow left, or much love.
August 8, 2011