US stocks tumbled yesterday as downgrades of Greece and Portugal fuelled fear about eurozone economic stability, and a grilling of Goldman Sachs on Capitol Hill heightened the possibility of financial reform.
Stocks posted their worst day in nearly three months and the CBOE Vix volatility index, Wall Street’s barometer of investor fear, jumped about 31 per cent, its biggest one-day move since October 2008.
The move came as Senators hammered Goldman Sachs executives for taking advantage of the housing bubble and making billions off that market’s collapse. The hearings coincided with lawmakers’ efforts to pass strict regulations for banks.
As the drama unfolded in Washington, the cost of insuring Greek and Portuguese debt against default rose to record highs after rating agency Standard and Poor’s slashed their sovereign ratings.
The Dow Jones dropped 213.04 points, the Standard & Poor’s 500 slid 28.34 points and the Nasdaq Composite Index lost 51.48 points.