Stocks Tumble After S&P Downgrade Of US
NEW YORK (WWJ/AP) – The U.S. stock market joined a sell-off around the world Monday in the first trading since Standard & Poor’s downgraded American debt.
The Dow Jones industrial average plummeted more than 600 points in afternoon trading.
Treasury prices rose — despite S&P’s assessment that they were a riskier investment than the debt of some other countries like Canada and France. Investors still view Treasurys as one of the world’s few safe havens from turmoil in other financial markets like stocks or commodities.
The yield on the 10-year Treasury note fell to 2.35 percent from 2.57 percent late Friday. A bond’s yield drops when its price rises. The 10-year note’s yield fell as low as 2.06 percent in 2008.
Speaking live on WWJ Newsradio 950, financial adviser Leon LaBrecque, founder and managing partner of Troy-based LJPR, said the nation has to get rid of what he calls an “ominous” amount of debt.
“We have debt pushing almost the exact amount of our GDP and that’s never good,” said LaBrecque.
But, at least in his eyes, LaBrecque said the U.S. still has a top-tier credit rating.
“I mean, the Isle of Man has a higher credit rating, and New Zeland has a higher credit rating, and, egads, even the French have a higher credit rating,” he said. “But, where are you going to go put trillions of dollars? There’s still only one place to do it. And we do have an economy that’s still thriving. Even if it slows down, it’s still thriving.
Hear more from WWJ’s interview with LaBrecque:
As you can imagine Michigan stock prices took hit:
Ford was down 91-cents to 9.93, a loss of 8-percent.
General Motors finished at 24.57, down a dollar 74. That was a loss of 7-percent.
Some bigger losses were from:
– Borg Warner which lost nearly $6 to finish at $62.56.
– Visteon was down just over $5 to finish at $48.38.
– TRW Automotive was down $4 and 25 cents to $40.32.
– Dow Chemical, DTE Energy and Lear Corporation and Taubman Centers were all down more than $3.
In an address to the nation, Monday, President Obama said Monday that America remains a “Triple-A country. (More on this from CBSNews).
Are you concerned about your investments, making any moves to protect your finances? Want to talk to WWJ about it for a story? E-mail our producers at WWJNewsroom@cbsradio.com.
The Associated Press contributed to this report.