MN Cos. Feel Impact of Stock Market Plunge
U.S. stocks plunged Thursday with the Dow Jones industrial average closing down more than 500 points, marking the biggest single-day point loss since December 1, 2008. That held true only until Monday, which brought an even worse day for trading, when the Dow slid 635 points, or 5.55 percent.
The S&P 500 index fell 79.9 points, or 6.66 percent; European and Asian markets declined significantly; and emerging markets like Brazil and Turkey reportedly experienced major declines.
And it appears that Minnesota's largest companies were dealt some of the largest blows. The Bloomberg Star Tribune 100 index of Minnesota's largest publicly traded companies fell 7.2 percent on Monday, outpacing both the S&P 500 and the Dow Jones industrial average.
Minnesota's 100 largest public companies have shed $82.3 billion, more than 17 percent, in market value since July 22, the Star Tribune reported. Only Caribou Coffee, which rose 3.6 percent during the period, gained value; the remaining 99 companies experienced losses.
Monday was the first trading day to follow Standard & Poor's downgrade of U.S. debt. Although the downgrade indicated that U.S. Treasury bonds have become riskier and creditors can no longer assume with certainty that the U.S. government will pay them back, investors actually put more money into U.S. bonds on Monday, which led to lower borrowing costs for the government, according to media reports.
On Monday, President Obama made a television appearance meant to reassure the markets, in which he said that the nation has “always been and always will be a triple-A country,” regardless of a grade assigned by a credit agency. But the speech didn't stop the markets' downfall. A report by the Washington Post notes that the sell-off of late has eliminated billions of dollars of wealth, and it is unnerving consumers and businesses.
And on Monday, S&P downgraded its ratings for Fannie Mae and Freddie Mac, as well as for some life insurers, securities clearinghouses, and investment funds.
A mid-day Associated Press report on Tuesday noted that bargain hunters were pushing stocks up, with the Dow rising 218 points, or 2 percent. That's after dropping 635 points on Monday.
Peter Coleman, head of equity research at JMP Securities, told the AP that the gains were a “relief rally,” as there was nothing new to make investors feel better or worse, but some investors saw good values in stocks.