NEW YORK (CNNMoney) — U.S. stocks plunged sharply Monday as fearful investors faced the news that the United States had lost its coveted “AAA” credit rating.
All three major U.S. stock indexes were down between 4% and 5% in early afternoon trading, adding to brutal losses last week. Stocks are now down 14% during the past two weeks.
Experts tried to say the downgrade by itself shouldn’t matter — that it was expected and that the United States still has a strong credit rating.
But the market wasn’t buying it. “Investors are having one reaction to the downgrade: sell first and ask questions later,” said Paul Zemsky, head of asset allocation with ING Investment Management.
Even if investors dismissed the downgrade, they’d still have to contend with the European debt crisis and rising fears of a new recession in the United States. Those are the factors that led to a drop of more than 6% last week, the worst since the financial crisis of 2008.
Full Story: Selloff intensifies, Dow down 450