U.S. equities plunged, Aug. 1-5

U.S. equities had started to crater days before Standard and Poor’s stripped the U.S. of its Triple A rating after markets closed on Friday Aug. 5. On Thursday Aug. 4, the Dow Jones Industrial Average suffered its biggest point drop since December 2008, while the S&P 500 posted its worst performance since February 2009. For the full trading week, the Dow Jones Industrial Average plunged 698.63 points or 5.75% to 11,444.61, while the S&P 500 index tanked by 92.9 points or 7.2% to finish at 1,199.38. Officials at the U.S. ratings agency said on Monday Aug. 8 that the earliest a sovereign has ever returned to an AAA rating was nine years and confirmed that another rating reduction could be in the cards if there was “greater fiscal slippage.”  

With few exceptions, it was pretty much carnage across the board during the Aug. 1-5 trading week. Whether it was anticipation of the ratings downgrade or broader fears that the global economy is teetering on the edge of what could become Part Two of the financial crisis of 2008, most stocks took a pounding. Walter Energy headed the list, tumbling US$49.27 to US$73.30, while Cliffs Natural Resources followed with a drop of US$13.36 to US$76.46. BHP Billiton dropped US$12.41 to US$79.14, Consol Energy slid US$12.01 to US$41.59, and Peabody Energy fell US$10.52 to US$46.87. Alpha Natural Resources lost US$10.40 to US$32.31, Sociedad Quimica y Minerale de Chile slid US$7.30 to US$57.02, Mosaic fell US$7.08 to US$63.59 and Teck dropped US$6.98 to US$42.46. Vale lost US$4.46 to US$27.98.

Even the larger precious metals companies weren’t spared. Barrick Gold dropped US$1.71 to US$45.86, Freeport McMoRan Copper & Gold fell US$6.97 to US$45.99, Silver Wheaton lost US$1.93 to US$34.15 and Newmont Mining slid US$1.20 to US$54.41.

The few companies that landed in positive territory included Randgold Resources, which topped the list of gains with an advance of US$3.67 to US$94.48. Royal Gold added US$2.44 to US$66.54, Agnico-Eagle Mines advanced 60¢ to close at US$56.35, and Yamana Gold edged up 24¢ to US$13.22. The Philadelphia Gold and Silver index lost 9.75 points or 4.74% and closed at 196.06. The price of gold moved from its New York close of US$1,620.30 per oz. on Aug. 1 to its finish at US$1,663.40 per oz. on Aug. 5.