We're in for another rocky day on Wall Street. Standard & Poor's downgraded the credit ratings of Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.
The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
Meantime, U.S. stocks tumbled amid a rout in global markets after S&P downgraded the U.S. credit rating for the first time.
At the opening of trading, the Dow Jones industrial average was down 192, or 1.7 percent, to 11,252. The S&P 500 was down 23, or 2 percent to 1,176. The Nasdaq was down 64, or 2.5 percent, to 2,468.
It's really a perfect storm. There's the European debt crisis, the U.S. credit downgrade and general anxiety about the global economy. All of that making for a very bumpy ride for investors.
Many investors have been turning to precious metals. The price of gold Monday morning topped $1,700 for the first time in response to the downgrade.
Markets in Japan, Hong Kong and South Korea all dropped sharply on Monday. European markets shed their early momentum, even with the Central Bank promising to buy up Italian and Spanish bonds to help the two countries avoid devastating defaults.
Hoping to avert panic, the G-7 announced this weekend that they were committed to taking all necessary measures to support financial stability and growth.
But many analysts think that the international efforts may not be enough to calm jittery markets, and they've seen that anxiety reflected in both Europe and Asia.
"What we saw this morning at the opening of the Asian markets is that the reaction to the U.S. debt downgrade was really negative and we expect that the same will occur in Europe," said economist Oscar Bernarl. "Now there have been some declarations from the authorities both in the United States and in Europe that have tried to calm down the markets, but we don't know at this point if this will be sufficient."
Treasury Secretary Tim Geithner, along with Federal Chairman Ben Bernanke were part of the G-7 pledge, but it's too little too late for critics. Some of them are calling for either to step down.
Despite rumors of his resignation, the White House confirms Geithner will not be leaving his post. And he and the White House remain critical of S&P's decision to downgrade the nation's credit rating.
Some argue it is difficult to trust S&P's judgment after its failure to catch problems with the mortgage bond market a few years back.
David Beers, who heads the government debt rating unit for S&P, says the right call was made and he has no regrets.
"The track record of those government ratings in terms of the job that they're designed to do is capture relative default risk of 126 sovereign governments that we rate around the world, the many local and regional governments that we rate around the world," said Beers. "That track record remains very strong and I expect it will go on remaining strong."
Experts say what happened on Wall Street was be the knee-jerk reaction, a lot of emotional trading. And what sets all this activity apart is the fact that the credit downgrade is unprecedented. This is all uncharted territory, so the waiting game continues.
Most analysts think anxiety will rule the start of the day, but that their will be stability by the afternoon.
And, as far as S&P is concerned, they told Good Morning America on Monday that they will not take the blame for this, that the markets were already turbulent by the time they made their downgrade decision.
The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
Meantime, U.S. stocks tumbled amid a rout in global markets after S&P downgraded the U.S. credit rating for the first time.
At the opening of trading, the Dow Jones industrial average was down 192, or 1.7 percent, to 11,252. The S&P 500 was down 23, or 2 percent to 1,176. The Nasdaq was down 64, or 2.5 percent, to 2,468.
It's really a perfect storm. There's the European debt crisis, the U.S. credit downgrade and general anxiety about the global economy. All of that making for a very bumpy ride for investors.
Many investors have been turning to precious metals. The price of gold Monday morning topped $1,700 for the first time in response to the downgrade.
Markets in Japan, Hong Kong and South Korea all dropped sharply on Monday. European markets shed their early momentum, even with the Central Bank promising to buy up Italian and Spanish bonds to help the two countries avoid devastating defaults.
Hoping to avert panic, the G-7 announced this weekend that they were committed to taking all necessary measures to support financial stability and growth.
"What we saw this morning at the opening of the Asian markets is that the reaction to the U.S. debt downgrade was really negative and we expect that the same will occur in Europe," said economist Oscar Bernarl. "Now there have been some declarations from the authorities both in the United States and in Europe that have tried to calm down the markets, but we don't know at this point if this will be sufficient."
Treasury Secretary Tim Geithner, along with Federal Chairman Ben Bernanke were part of the G-7 pledge, but it's too little too late for critics. Some of them are calling for either to step down.
Despite rumors of his resignation, the White House confirms Geithner will not be leaving his post. And he and the White House remain critical of S&P's decision to downgrade the nation's credit rating.
Some argue it is difficult to trust S&P's judgment after its failure to catch problems with the mortgage bond market a few years back.
David Beers, who heads the government debt rating unit for S&P, says the right call was made and he has no regrets.
"The track record of those government ratings in terms of the job that they're designed to do is capture relative default risk of 126 sovereign governments that we rate around the world, the many local and regional governments that we rate around the world," said Beers. "That track record remains very strong and I expect it will go on remaining strong."
Experts say what happened on Wall Street was be the knee-jerk reaction, a lot of emotional trading. And what sets all this activity apart is the fact that the credit downgrade is unprecedented. This is all uncharted territory, so the waiting game continues.
Most analysts think anxiety will rule the start of the day, but that their will be stability by the afternoon.
And, as far as S&P is concerned, they told Good Morning America on Monday that they will not take the blame for this, that the markets were already turbulent by the time they made their downgrade decision.
