By Greg Peel

The Dow fell 634 points or 5.6% to 10,809, the S&P fell 6.7% to 1119 and the Nasdaq fell 6.9%.

At the end of the day the selling was just too overwhelming. As we saw in Australia yesterday, there are those in the market who consider stocks to be oversold and considered the S&P downgrade of the US to be of less significance in an already de-rated market than doomsayers might suggest. The ASX 200 rallied back from an initial plunge of around 100 points to be only down about 25 points but when Asia opened to the downside and didn't bounce, the sellers swamped the buyers.

Wall Street's also attempted a rally, taking the Dow from 600 points down before 3pm to around 330 down half an hour later. The buying surge at that point looked it might gain momentum but it is in the last hour when margin call selling hits the market, as well as redemptions, if any windows are open. The suggestion is that hedge funds were leading the exodus, many having been established post 2008 and looking good up until recently. Volume on all US stock markets was enormous by recent standards.