STOCKS DESTROYED
Tweet
Share
E-mail
Get Alerts BRK-A Hot Sheet
Up)Join SI Premium – FREE
Stocks were absolutely pummeled Monday following the U.S. credit rating downgrade late Friday and the cascading events from the move.
The Dow closed down 635 points, or 5.6%, to 10,810. The Nasdaq fell 175, or 6.9%, and the S&P 500 fell 80, or 6.7%. Illustrating the carnage, every stock in the S&P 500 closed lower this afternoon. The S&P 500 is now down 17 percent since the sell-off started in earnest on July 22nd. It was also the sixth-largest point drop for the Dow Jones in its history and the largest since the 2008 credit crisis.
S&P downgraded the U.S. triple-A rating lower by one notch to 'AA+’, saying the recent budget deal didn't do enough to address a dismal outlook for the financial system. The firm also said its outlook for the U.S. long-term rating is Negative, meaning S&P doesn't see the US regaining the 'AAA' rating for some time.
"We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade."
Following its U.S. downgrade, S&P downgraded Fannie Mae and Freddie Mac today. The firm also cut the rating on Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) to "negative," along with a host of other insurers.
Bank stocks were completely destroyed Monday on worries about the ramifications of the credit downgrade. Bank of America (NYSE: BAC) was the worst performer in the group, falling 18 percent on a massive AIG (NYSE: AIG) lawsuit and worries the company would have to raise more capital. Bank of America denied the speculation, saying no new capital is needed. Elsewhere in the sector, Citigroup (NYSE: C) fell 16 percent and JPMorgan (NYSE: JPM) fell 9 percent.
Tuesday markets will be keenly focused on comments from Fed Chairman Ben Bernanke and the FOMC. There is hope some new quantitative easing measure may be announced, although many think the Fed may be out of bullets. The Fed announcement is expected at 2:15PM ET.
The Dow closed down 635 points, or 5.6%, to 10,810. The Nasdaq fell 175, or 6.9%, and the S&P 500 fell 80, or 6.7%. Illustrating the carnage, every stock in the S&P 500 closed lower this afternoon. The S&P 500 is now down 17 percent since the sell-off started in earnest on July 22nd. It was also the sixth-largest point drop for the Dow Jones in its history and the largest since the 2008 credit crisis.
S&P downgraded the U.S. triple-A rating lower by one notch to 'AA+’, saying the recent budget deal didn't do enough to address a dismal outlook for the financial system. The firm also said its outlook for the U.S. long-term rating is Negative, meaning S&P doesn't see the US regaining the 'AAA' rating for some time.
"We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade."
Following its U.S. downgrade, S&P downgraded Fannie Mae and Freddie Mac today. The firm also cut the rating on Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) to "negative," along with a host of other insurers.
Bank stocks were completely destroyed Monday on worries about the ramifications of the credit downgrade. Bank of America (NYSE: BAC) was the worst performer in the group, falling 18 percent on a massive AIG (NYSE: AIG) lawsuit and worries the company would have to raise more capital. Bank of America denied the speculation, saying no new capital is needed. Elsewhere in the sector, Citigroup (NYSE: C) fell 16 percent and JPMorgan (NYSE: JPM) fell 9 percent.
Tuesday markets will be keenly focused on comments from Fed Chairman Ben Bernanke and the FOMC. There is hope some new quantitative easing measure may be announced, although many think the Fed may be out of bullets. The Fed announcement is expected at 2:15PM ET.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- T-Mobile (TMUS) and EQT Announce JV to Acquire Lumos
- Berkshire Hathaway Raises ¥263.3 Billion From Bond Sale - Bloomberg
- Warren Buffet's Berkshire stock target raised at UBS into earnings
Create E-mail Alert Related Categories
Insiders' Blog, Market Check, Trader TalkRelated Entities
Warren Buffett, JPMorgan, Ben S. Bernanke, Citi, Federal Open Market Committee, Standard & Poor'sSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
