-U.S. stocks fell sharply early Monday and the New York Stock Exchange invoked the so-called 'Rule 48' to smooth the open of trading after a credit downgrade of the federal government primed markets to extend last week's steep losses.
The Dow Jones Industrial Average dropped 149 points, or 1.3%, to 11295 shortly after the open of trading. In a sign of the rocky market activity expected Monday, the New York Stock Exchange invoked the little-used Rule 48 to allow designated market makers to refrain from disseminating price indications ahead of the opening bell. The rarely used procedure makes it easier and faster to open trading when the action is expected to be especially volatile.
The Standard & Poor's 500 stock index dropped 23 points, or 1.9%, to 1176 and the Nasdaq Composite slumped 70 points, or 2.8%, to 2463.
The Dow posted its biggest weekly point loss since the financial crisis in 2008 last week, falling 5.8% as investors lost faith in European leaders' ability to stave off a debt crisis and as fears grew that the economic slowdown would deepen into a recession.
Monday's market action was the first since Standard & Poor downgraded the U.S. credit rating late Friday to double-A-plus from triple-A, a move whose substance, if not its timing, was widely anticipated.
In spite of the foreknowledge, investors embarked on a selloff in early trading as they watched for further statements from S&P. Shortly before the open, the firm lowered its ratings on key U.S. clearing bodies such as the Depository Trust Co.
"The initial reaction with most things problematic in the market is to sell and ask questions later," said Jay Suskind, senior vice president at Duncan-Williams. "[But traders] have had over 48 hours to think about what they're going to do at 9:30. I think you'll start to see some buying later on."
Last week's declines sent the broader S&P 500 to a 7.2% loss and the Nasdaq Composite to fall 8.1%. All three major U.S. stock indexes are in negative territory for 2011.
The U.S. downgrade competed for investor attention with sovereign-debt headlines in Europe. European stocks erased early gains as the European Central Bank's pledge to buy sovereign bonds failed to restore investor confidence for long, with the Stoxx Europe 600 hitting a 15-month low.
Asian bourses were pummeled, with China's Shanghai Composite dropping nearly 4% to a 13-month low. The Group of 20 leading industrialized and developing nations statement that they were prepared to act in coordination to stabilize markets also failed to stem the selling tide.
One winner was U.S. Treasurys, which remained a safe haven for many investors despite the downgrade. Yield on the 10-year note fell 3.7% to 2.481% in recent action.
In addition, gold futures soared above $1,700 an ounce, as investors sought assets viewed as "safe."
Crude oil futures slide below $84 a barrel amid worries about the economy.
The U.S. dollar fell against yen, but moved higher against the euro.
The economic calendar was bare Monday, but investors will look forward to the Federal Reserve's monetary policy statement on Tuesday for an indication of how worried policy makers are about the market's tumble and the slowing economy.
In corporate news, shares of blue chip telecommunications company Verizon Communications shed 1.6% after about 45,000 workers went out on strike over the weekend due to a contract dispute.
McDonald's shed 0.4% despite posting a 5.1% gain in same-store sales for July that reflected growth in all regions.
Berkshire Hathaway fell 1.2% after Warren Buffett's company reported second-quarter operating earnings declined from last year, as the company insurance operations suffered a loss.
The Dow Jones Industrial Average dropped 149 points, or 1.3%, to 11295 shortly after the open of trading. In a sign of the rocky market activity expected Monday, the New York Stock Exchange invoked the little-used Rule 48 to allow designated market makers to refrain from disseminating price indications ahead of the opening bell. The rarely used procedure makes it easier and faster to open trading when the action is expected to be especially volatile.
The Standard & Poor's 500 stock index dropped 23 points, or 1.9%, to 1176 and the Nasdaq Composite slumped 70 points, or 2.8%, to 2463.
The Dow posted its biggest weekly point loss since the financial crisis in 2008 last week, falling 5.8% as investors lost faith in European leaders' ability to stave off a debt crisis and as fears grew that the economic slowdown would deepen into a recession.
Monday's market action was the first since Standard & Poor downgraded the U.S. credit rating late Friday to double-A-plus from triple-A, a move whose substance, if not its timing, was widely anticipated.
In spite of the foreknowledge, investors embarked on a selloff in early trading as they watched for further statements from S&P. Shortly before the open, the firm lowered its ratings on key U.S. clearing bodies such as the Depository Trust Co.
"The initial reaction with most things problematic in the market is to sell and ask questions later," said Jay Suskind, senior vice president at Duncan-Williams. "[But traders] have had over 48 hours to think about what they're going to do at 9:30. I think you'll start to see some buying later on."
Last week's declines sent the broader S&P 500 to a 7.2% loss and the Nasdaq Composite to fall 8.1%. All three major U.S. stock indexes are in negative territory for 2011.
The U.S. downgrade competed for investor attention with sovereign-debt headlines in Europe. European stocks erased early gains as the European Central Bank's pledge to buy sovereign bonds failed to restore investor confidence for long, with the Stoxx Europe 600 hitting a 15-month low.
Asian bourses were pummeled, with China's Shanghai Composite dropping nearly 4% to a 13-month low. The Group of 20 leading industrialized and developing nations statement that they were prepared to act in coordination to stabilize markets also failed to stem the selling tide.
One winner was U.S. Treasurys, which remained a safe haven for many investors despite the downgrade. Yield on the 10-year note fell 3.7% to 2.481% in recent action.
In addition, gold futures soared above $1,700 an ounce, as investors sought assets viewed as "safe."
Crude oil futures slide below $84 a barrel amid worries about the economy.
The U.S. dollar fell against yen, but moved higher against the euro.
The economic calendar was bare Monday, but investors will look forward to the Federal Reserve's monetary policy statement on Tuesday for an indication of how worried policy makers are about the market's tumble and the slowing economy.
In corporate news, shares of blue chip telecommunications company Verizon Communications shed 1.6% after about 45,000 workers went out on strike over the weekend due to a contract dispute.
McDonald's shed 0.4% despite posting a 5.1% gain in same-store sales for July that reflected growth in all regions.
Berkshire Hathaway fell 1.2% after Warren Buffett's company reported second-quarter operating earnings declined from last year, as the company insurance operations suffered a loss.
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