Global Banking Crisis Fears Dow Jones Drop 520 Points, The main stock index Dow Jones industrial average closed down again last night plunged 519.83 points (4.62 percent) to a level of 10719.94. Nasdaq technology stock index slid 101.47 points (4.09 percent) to 2381.05 and the S & P index also fell 51.77 points (4.42 percent) to 1120.76 position.
Fear of a global banking crisis led investors to back out of the stock and switch to an asset that is considered safe (safe haven) such as gold and Swiss francs. Catalyst is, in the last few weeks the French feared would become a country that will lose rated AAA after the United States (U.S.).
Although all three rating agencies internasinal mengegaskan that France's debt ratings, investors speculated that the French bank hit by problem loans.
Societe General is to be denied market talk of rumors that they have a sizable exposure to the stricken European countries in the region's debt crisis. However, its stock price kept depressed. German and French stock exchange fell 5 per cent overnight.
Prices of banking shares on U.S. exchanges also move down. Bank of America even to convene a conference of investors in order to convince investors that they do not require additional funding. But investors did not seem impressed and the price is still declining.
Gold for December contract had surged up through the level of U.S. $ 1,800 per troy ounce for the first time as investors pulled money out of stocks and switch to the precious metal commodity contracts. Gold is fast becoming a favorite alternative investment and hedging due to the high global uncertainty. However the end trading closed at U.S. $ 1,797 per troy ounce.
"The fall of Wall Street also triggered by investors who were exposed to margin limits so that the transaction should make sales increase market jitters," said Andrew Frankel, vice president of Stuart Frankel & Co. in New York.