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CHICAGO (CBS) — A massive selloff on Wall Street Monday after the U.S. credit rating slip made for the worst single-day loss since December 2008.
As CBS 2’s Kristyn Hartman reports, the Dow Jones Industrials dropped 634 points on Monday, closing at 10,809, while the NASDAQ dropped 174 points and the S&P 500 70 points.
The news was so depressing that Tom Duffy of Chicago just decided to stop looking at financial news and read the comics.
“As you get older, it gets a lot tougher,” he said. “You don’t have time to catch up.”
LISTEN: WBBM Newsradio’s John Cody reports
Meanwhile, WBBM Newsradio’s John Cody spoke to traders at the Chicago Board of Options Exchange. One trader, John, said it was crazy on the floor for a while Monday. But it wasn’t the worst he’d seen.
“I think it’s not as bad as the real estate crisis in 2008, but it was one of those days when there’s just, like, a vacuum in liquidity, and people were trying to achieve something like normal conditions that wouldn’t cost them anything,” he said.
For another trader, Steven, the term that came to mind was mayhem. But then he said it calmed down as clients headed for the sidelines to decide their next moves.
The drop followed action Friday to downgrade the United States’ perfect AAA credit rating.
“No matter what some agency may say, we’ve always been, and always will be, a Triple-A country,” President Barack Obama said.
But from traders’ and investors’ perspective, saying the U.S. will always be a AAA economy does not make it so – even if it comes from the mouth of the president.
“It feels like a meltdown,” said Adolfo Laurenti, deputy chief economist for Mesirow Financial. “For the average family, it might mean some very short-term opportunities with very low interest rates, but there will be a lot of uncertainty about jobs and savings.”
With packages such as 401(k)s, experts said portfolio diversity is the key. They point out, even now, it’s not all bad – certainly not 2008 bad.
“The problem is that we are lacking confidence that this economy will improve anytime soon, and all we are doing is just holding back,” he said.
Laurenti says politics on both sides of the aisle are the number one culprit. He says the debt ceiling debate didn’t help either.
His advice to worried families out there is not to panic.