Fear ran rampant on Wall Street on this first Monday after Standard & Poor's downgraded the US credit rating from AAA to AA+. All three major indexes plummeted between 5% and 7%, with the Dow landing below 11,000 for the first time since November.
This is not the first down day for Wall Street. CNN reports that US stocks have taken a beating over the past two weeks, falling by 15%. Though some experts have advised that the S&P downgrade won't really matter that much, it appears that investors were not buying that.
Paul Zemsky, head of asset allocation with ING Investment Management puts it this way
"Investors are having one reaction to the downgrade: sell first and ask questions later."
Analysts say that the downgrade is not the only thing freaking out investors, who still have to wrestle with the European debt crisis and increasing worries of a new U.S. recession.
Few companies were spared during today's debacle. All members of the Dow 30 and all of those in the S&P 500 traded lower.
Financial stocks were one of the hardest hit, with Bank of America (BAC, Fortune 500) plunging 20%, Citigroup (C, Fortune 500) and Morgan Stanley (MS, Fortune 500) sinking roughly 15%.
The Los Angeles Times reports that Standard & Poor's threw a monkey wrench into trading today when it announced in the morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But Jonathan Corpina, a trader on the New York Stock Exchange for Meridian Equity Partners says about that..
"I don’t think the S&P announcement is the lead director of the day -- I just think it is the icing on the cake."