President Obama’s declaration of faith in our “triple-A country” was not enough to save the markets today, with the Dow Jones Industrial Average falling more than 630 points following S&P’s downgrade of the United States’ credit rating. All told, it was the single worst day for investors since the 2008 financial crisis, CNN reports. In a press statement earlier in the day, Obama blamed the drawn-out fight over the debt ceiling for having “roiled the markets and dampened consumer confidence and slowed the pace of recovery,” and he called on everyone involved “to put what’s best for the country ahead of self-interest or party or ideology.” He admitted that our current financial position is a “legitimate source of concern,” but insisted that “our problems are eminently solvable. And we know what we have to do to solve them.” First, we have to get through today’s Wall Street bruising.
All three indexes dropped between 5 percent and 7 percent, with losses of 80 points for the S&P 500, 175 for the NASDAQ, and 635 for the Dow, which ended the day below 11,000 — a low not seen since November.
“We knew from the outset that a prolonged debate over the debt ceiling, a debate where the threat of default was used as a bargaining chip, could do enormous damage to our economy and the world’s,” Obama said this afternoon. That played out as the day went on, with Wall Street’s VIX, or “fear index,” increasing 44 percent to its highest level since 2009. Things internationally didn’t fare much better.
Looking forward, Obama called for Congress to approve funding for unemployment insurance and to extend this year’s payroll tax cut in order to spur consumers. That requires patience; for now, according to one expert, “investors are having one reaction to the downgrade: sell first and ask questions later.”