By Daniel Wagner, AP Business Writer
NEW YORK (AP) — Global stock markets tumbled Monday on the first trading day since Standard & Poor's downgraded long-term U.S. debt. The Dow Jones industrial average plunged 634.76 points, the sixth-worst point less in its 112-year history. Investors are anxious about a weakening U.S. economy and a widening debt crisis in Europe.
Some analysts had worried that Treasury yields would surge after S&P's downgrade. That would happen if investors demanded higher returns to compensate for their risk.
The opposite happened. Treasury yields fell Monday to their lowest level of the year as investors sought a safe place for their cash. Their actions showed continued confidence in long-term U.S. debt.
Here are some questions and answers about the market's turmoil Monday:
Q: Why are stock prices plunging?
A: Stocks are considered risky, especially when the economy falters. When the economy is growing, companies can expand, hire and increase profits. A string of bad economic data has led many investors to worry that the economy will dip back into recession. If that happens, stocks would likely slide further. Investors already were growing fearful about the economy before S&P's announcement Friday night. Oil prices also are falling, a sign that traders expect the weak economy to reduce demand from consumers and businesses.