US stocks plunge 5pct to GFC low point

US stocks plummeted more than 5 per cent on Monday, with the Dow Jones Industrial Average losing 634 points, after Standard & Poor's dealt the United States an unprecedented downgrade. The Dow was down 5.6 per cent to finish at 10,809.85, its lowest close since last October. It was the steepest one-day drop in point terms since the financial crisis of 2008. The broader S&P 500 fell 6.7 per cent to 1,119.46, while the tech-heavy Nasdaq dropped 6.9 per cent to 2,357.69. S&P lowered the US long-term sovereign debt rating from AAA to AA+ after markets closed Friday, citing Washington's inability to rein in its mounting deficits. US stocks started falling as markets opened and hit new lows after President Barack Obama gave a televised speech to defend Washington's credit-worthiness and declare that the United States "always will be a triple-A country". Start of sidebar. Skip to end of sidebar. End of sidebar. Return to start of sidebar. Traders worried that the downgrade would hit the bond markets, but instead Treasury prices rallied strongly. The yield on the 10-year Treasury fell to 2.34 per cent from 2.56 per cent late Friday, while 30-year bonds dropped to 3.66 per cent from 3.82 per cent. Bond prices and yields move in opposite directions. Gold, seen as a safe-haven asset in time of financial turmoil, was trading for $1,716.68 per troy ounce on the spot market in New York, after earlier hitting a new intraday record of $1,720.82. "The S&P downgrade of US sovereign debt, to AAA to AA+, sent a shockwave through the markets today," said Briefing.com. All of the Dow's 30 blue-chip stocks closed lower on Monday, but losses were steepest among financial companies, industrials and corporations whose bottom lines are closely tied to commodity prices. JPMorgan Chase fell 9.4 per cent, while American Express closed the day 8.8 per cent down. Bank of America plunged an eye-popping 20.3 per cent after it was hit with a $10.5 billion lawsuit from insurer AIG over its sales of faulty mortgage-backed securities prior to 2008. Aluminum giant Alcoa dropped 11.4 per cent, while Caterpillar fell 9.2 per cent. AFP