* VIX jumps above 46 as fear rules, S&P slides 6 pct
* S&P's drop puts it close to bear market territory
* Banking, energy sectors among hardest hit
* About 98 percent of NYSE stocks in negative territory
* Dow off 4.6 pct, S&P down 5.9 pct, Nasdaq off 5.9 pct
* For up-to-the-minute market news see [STXNEWS/US]
(Updates to late afternoon)
By Ryan Vlastelica
NEW YORK, Aug 8 U.S. stocks plummeted for the
second straight session, driving the S&P 500 and the Nasdaq
down 6 percent on Monday in the first session since Standard &
Poor's cut the nation's perfect AAA credit rating.
The downgrade -- the first in the country's history --
reflected investors' rising fear about the economic outlook
and Washington's ability to meet the challenges.
The CBOE Volatility Index .VIX, Wall Street's "fear
gauge," jumped 45 percent to an intraday peak at 46.90, in the
VIX's first leap above 40 since May 2010.
Monday's huge sell-off extended the losses in the previous
week, which was Wall Street's worst in more than two years.
The S&P 500 is down 17 percent from its 2011 closing high,
reached on April 29 -- putting the benchmark index close to
the 20 percent decline from a recent peak that Wall Street
defines as bear market territory.
"This is compounding the concerns we already had about
Europe and the pace of economic growth," said John Carey,
portfolio manager at Pioneer Investment Management in Boston,
which has about $260 billion in assets under management.
"People are asking, 'Can the economy still grow in the
face of all this?'"
The Dow Jones industrial average .DJI sank 525.78
points, or 4.59 percent, to 10,918.83. The Standard & Poor's
500 Index .SPX dropped 70.30 points, or 5.86 percent, to
1,129.08. The Nasdaq Composite Index .IXIC lost 149.66
points, or 5.91 percent, to 2,382.75.
Reflecting the extent of fear and the selling. about 98
percent of the issues traded on the New York Stock Exchange
were in negative territory. Decliners outnumbered advances on
the NYSE by nearly 60 to 1. On the Nasdaq, about 92 percent
of the stocks traded were in the red. Nearly 15 Nasdaq stocks
fell for every one that rose.
While all 10 S&P sectors fell more than 2 percent, the
groups most sensitive to the economy, such as banking and
commodities, were the hardest hit. The S&P financial index
.GSPF lost 8.3 percent while the S&P energy index .GSPE
lost shed 6.9 percent. U.S. crude oil futures slid 6.1
percent, or $5.31, to $81.57 a barrel.
Late on Friday after the market's close, S&P cut the
United States' pristine long-term credit rating of AAA by one
notch to AA-plus on concerns about debt levels in the world's
largest economy. The downgrade could eventually raise
borrowing costs for the U.S. government and companies, as well
as for consumers. For details, see [ID:nLDE77500Z]
Bank of America Corp (BAC.N) shares plummeted 18 percent
to $6.71, after hitting a fresh 52-week low at $6.31. The
banking company's stock the most actively traded name on the
New York Stock Exchange and one of the S&P 500's biggest
United States Steel Corp (X.N) slid 12.3 percent to
Only one of the S&P 500's components -- Newmont Mining
(NEM.N)-- was in positive territory, while gold, seen as a
safe haven, rallied to above $1,700 an ounce. Newmont Mining's
stock was up 0.8 percent at $54.82.
Even the European Central Bank's dramatic intervention in
bond markets, which pushed down yields on Spanish and Italian
bonds, was not enough to stem selling. [ID:nLDE7770NM]
In company news, Verizon Communications Inc (VZ.N) fell
4.2 percent to $33.57 a day after nearly half of its wireline
business employees went on strike. The drop in the Dow
component's stock was not as steep as the broader market's
decline because telecom is viewed as a defensive sector.