Futures took a nose-dive Monday following last week's downgrade of U.S.'s credit rating from triple-A for the first time in history by ratings agency Standard & Poor’s.
The agency's move to cut U.S.'s long-term debt rating to AA-plus from AAA came late Friday after a wild week for stocks—its worst in more than two years—as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies hit sentiment.
S&P came in for significant criticism from U.S. Treasury Secretary Timothy Geithnersaid the rating agency showed "terrible judgment" in lowering the U.S. government’s credit rating.
Geithner said the agency's decision showed a "stunning lack of knowledge" about the basic maths used to develop the government's budget.
David Beers, global head of sovereign ratings at S&P, defended the firm's position, despite the discovery of a $2 trillion error in the firm's calculation of the projected debt to GDP ratio for the U.S.
"It is a complete mis-characterization on the Treasury's part about what happened in that highly technical discussion," Beers said. "These are large numbers...(but) even with these adjustments, the debt burden is rising so the substance of what we're saying has not changed," he told CNBC on Monday.
Warren Buffett, chairman of Berkshire Hathaway, however told CNBC there was no question that the U.S.'s credit rating was still triple-A, and that he was not changing his mind about Treasurys based on S&P's downgrade.
Meanwhile, oil prices also tumbled sharply, while gold surged above $1,700 an ounce.
European shares also tumbledaround 2 percent across the board, despite an announcement ahead of the opening of the markets from the European Central Bank (ECB) that it was entering the bond market to buy Italian and Spanish sovereign debt.
Among corporate news, Verizon declined after almost 45,000 employees Massachusetts to Virginia went out on strike over the weekenddue to a contract dispute.
McDonald's slipped even after the fast-food chain posted a 5.1 percent sales gainat established stores.
Warren Buffett's Berkshire Hathaway unit
AIG is planning to sue Bank of America to recover more than $10 billion in losseson $28 billion of investment in mortgage-backed securities.
On Tap Next Week:
MONDAY: Employment trends index
TUESDAY: NFIB small biz optimism index, productivity and costs, 3-yr note auction, FOMC mtg announcement; Earnings from Disney
WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, treasury budget; Earnings from Macy's, Cisco
THURSDAY: International trade, jobless claims, 30-yr bond auction, money supply; Earnings from Kohl's, Nordstrom, Nvidia
FRIDAY: Retail sales, consumer sentiment, business inventories; Earnings from JCPenney
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