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Wall Street turmoil continues amid Europe concerns

(Xinhua)

13:59, August 11, 2011

NEW YORK, Aug. 10 (Xinhua) -- U.S. stocks tumbled on Wednesday with all three major indexes down more than 4 percent amid investors' concerns about the U.S. economy and rumors saying France might lose its triple-A credit rating.

After the first-ever downgrade of the U.S. credit rating last Friday, the markets went wild in the first two trading days this week.

The Federal Reserve decided Tuesday to maintain its ultra-low interest rate for at least another two years and hinted it would take more monetary easing measures if necessary. The central bank' s pledge helped shore up the markets as Dow soared more than 600 points in the last hour of trading on Tuesday.

However, on Wednesday, rumors spread in the markets as investors speculated that France, the second largest euro zone economy only after Germany, might lose its triple-A credit rating, which spooked investors and triggered a heavy sell-off of French banks in the European markets.

It also weighed on the U.S. stock markets as investors also worried that the European financial strains may spread to banking institutions in America.

All three major indexes erased Tuesday' s gains. Dow Jones Industrial Average dropped more than 500 points to close at 10719.94. S&P 500 dropped 4.42 percent to close at 1120.76. Nasdaq Composite Index slipped 4.09 percent to 2381.05.

Some investors, however, still believed certain shares might have good opportunities in current situation.

"In terms of sectors, I am still bullish on tech stocks, especially big cap names with strong balance sheet, and other high dividend stock with reasonable valuations, " David Yan, head of CDO Research of Credit Suisse, told Xinhua.

He added that he didn' t think people will necessarily reduce exposure to stocks, although that was contingent on whether the U.S. economy will have another recession or not.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, climbed 22.7 percent to 43.01. Among key sectors in S&P 500, financial and industrial stocks led the decline.

On other markets, oil surged more than 4 percent after the U.S. government said crude supplies shrank more than expected last week and a new report forecasted strong global demand.

Gold ended at a record high of 1784.30 dollars an ounce due to strong risk-aversion appetite. While 10-year Treasury note yield dropped to 2.15 percent as investors still believed the treasury notes are safe bet in times of turmoil.

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