Stocks have plunged today after Standard & Poor’s announced that it was concerned over the U.S. government’s ability to control its debt level and deficit spending, and lowered its outlook from stable to negative. While the S&P didn’t downgrade U.S. government credit rating, the firm did express that it may in the future. The negative outlook on U.S. credit rating and the fact that the S&P feels it is weaker than other AAA sovereign peers has raised an alarm on Wall Street. U.S. debt currently is rated at the highest level. Some experts believe this should serve as a wake-call to Congress and the White House as the two sides seem to be more concerned over squabbling about politics rather than to find an effective solution to aid the economic recovery.
Major U.S. Stock Indices
DJIA: 12,129.31 (-1.72 percent)
S&P 500: 1,298.95 (-1.57 percent)
Nasdaq: 2,715.07 (-1.79 percent)
Russell 2000: 818.04 (-2.03 percent)
In other news:
- Citigroup (NYSE: C) announced a 32 percent drop in Q1 profits, but apparently impressed Wall Street analysts because it wasn’t as bad as they were expecting. [Bloomberg]
- Remember when hedge funds were the big bad financial bullies before the crisis, then they kind of went away? Well, they’re back now. [WSJ]
- Paul Krugman weighs in on the S&P warning on U.S. debt: [NY Times]
- Here’s a case for why the S&P’s downgraded outlook matters. [The Atlantic]
- Should Google (NASDAQ: GOOG) go smaller to help itself grow bigger? [Fortune]
- If gold and silver are the bubble, here’s the case that the end of QE2 is the needle. [Minyanville]
Check back for more news.
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