Dow plunges as much as 600 points by midday (UPDATES) (VIDEO)
A traders watches prices at his post at the New York Stock Exchange at the opening bell August 8, 2011.
The Dow Jones industrial average had plunged as much as 600 points by midday Monday, as investors weighed global economic conditions and Standard & Poor's downgrade Friday of the U.S. credit rating.
The Dow was trading down 536.18 points, or 4.7 percent, at 10908.43, and was on track to have its worst day since December 2008, The LA Times reports.
The concern about the U.S. credit rating was amplified when Standard & Poor's announced Monday morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees.
Monday was traders' first chance to respond to Friday's S&P downgrade, however the Times quoted market experts as saying that the selloff Monday was motivated more by growing concerns about the weakness of the global economy.
European markets lost early momentum and most were trading sharply lower ahead of the opening of U.S. markets, USA Today reports. News of European Central Bank intervention in the distressed bond market failed to halt the slide.
The European Central Bank had signaled in a statement Sunday that it was ready to begin buying Italian and Spanish government bonds, an attempt to stem panic over the euro zone's debt crisis. Finance ministers from the G-7 group of significant world economies also pledged support for troubled countries, CNN reports.
(GlobalPost reports: European markets in volatile trading as ECB said to buy debt)
Stock markets in Asia also continued their slide Monday, despite assurances S&P's that its historic downgrade of the U.S. credit rating would have no immediate impact on Asia-Pacific sovereign ratings, VOA reports.
Tokyo's Nikkei 225 index had lost 1.3 percent by mid-morning; the Australian market was 1.1 percent down, at a two-year low; and Hong Kong fell 3.5 percent. Markets were also weaker in Singapore, South Korea and Taiwan.
(GlobalPost reports: Asia share markets fall as US credit downgrade spooks investors)
Late Friday, S&P downgraded the United States' credit rating by one notch from "AAA" to to "AA+", the first such downgrade in history.
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