U.S. stocks continue their massive drop after Standard & Poor's downgraded the nation's credit rating from the prized AAA to AA+ for the first time in history. Wall Street fell well over 4 percent in earlier trading, extending losses of about 15 percent over the course of two weeks. Despite controversy over the S&P's decision on Friday, the rating agency is standing by its decision--which came after the U.S. government found a $2 trillion miscalculation of the nation's debt in the projections. S&P has also downgraded Fannie Mae (FNM), Freddie Mac (FMCC) and other U.S.-backed debt. Investors are flying out of stocks and into any investment resembling a safe haven, pushing precious metals up to record highs. Gold prices have soared to $1718, and Treasuries also saw a small rally, but the Swiss franc and Japanese yen benefited the most from the current market uncertainty. Oil prices continue to plummet, trading around $83 a barrel as investors believe demand will drop.
Major U.S. Stock Indices
DJIA: 11,085.19 (-3.19 percent)
S&P 500: 1,150.17 (-4.10 percent)
NASDAQ: 2,424.44 (-4.26 percent)
Russell 2000: 679.56 (-4.91 percent)
In other news:
- The European Central Bank is aggressively buying Spain and Italy bonds to try and contain the EU's debt crisis, but investors are skeptical about its impact. [Marketwatch]
- In the wake of the downgrade, the S&P is being pulled into the political machine that turned the debt debate into a massive debacle. [WSJ]
- Are Keynesian economists wrong about the negative impact massive spending cuts will have on the U.S. economy? [Fortune]
- Warren Buffett said that he doesn't care what the S&P thinks, which is good because the rating agency just cut its outlook on Berkshire Hathaway (BRK.A). [CNBC]
- The lawsuits keep piling up for Bank of America (BAC), which is now being sued by AIG (AIG) for $10 billion for "massive fraud" allegations. [Reuters]
Check back for more news.
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