Tuesday, April 19, 2011

Stocks plunge as ratings agency cuts U.S. outlook to negative as national debt expected to hit highest level since Pearl Harbor - 19th Apr 2011

Fears over the U.S. recovery reached a new high as the country was slapped with an unprecedented warning that its pristine credit rating could be downgraded because of spiralling national debt, predicted to reach its highest level since Pearl Harbor.

In a major blow to President Obama and the U.S. economy, ratings agency Standard & Poor’s threatened to expel America from the elite club of top-rated nations if the administration fails to tackle the towering national debt.

The ratings giant said there is a one in three chance that in the next two years it will downgrade the coveted gold-plated AAA rating that the U.S. has enjoyed since the 1940s.

Stocks tumbled around the world as the S&P lowered the long-term outlook for the debt of the world’s largest economy to ‘negative’ from ‘stable’.

The Dow Jones plunged 183.68 points (1.49 per cent) to 12,158.15 in the first three minutes of trading as the ratings agency raised the alarm bell giving a strong vote of no confidence in America’s ability to tackle its deficit.

The Nasdaq dropped 42.06 points (1.52 per cent) to 2,722.59. The dollar fell sharply against the euro and the pound.

It sparked a wave of selling on global stock markets, with the FTSE-100 losing two per cent of its value. Read More