Dow Jones Set to Open Lower Following S&P Downgrade
The Dow is set to open distinctly lower Monday morning following Standard & Poor’s recently announced downgrade of U.S. debt.
Futures trading indicators say the Dow Jones Industrial Average is set to open down 223 points as of 7 a.m.
Asian stocks experienced a significant drop Monday, increasing fears of a slowdown in economic growth.
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Major Asian markets such as Hong Kong’s Hang Seng fell 3.5 percent and South Korea’s Kospi dropped 3.3 percent. Also, Japan’s Nikkei 225 stock average slipped 2.2 percent.
Markets in London, Paris, and Frankfurt were also trading lower on Monday. Stocks dropped between 1 percent to about 2.5 percent. European Central Bank is attempting to offset the continent’s debt crisis by buying Spanish and Italian bonds.
Finance ministers and central bank governors said they planned to “take all necessary measures to support financial stability and growth.”
Some analysts say this would transfer significant risk to the balance sheet and others believe it would barely put a dent in Europe’s debt crisis.
Investors are waiting to see exactly how the S&P downgrade will affect the Dow. The U.S. credit rating was lowered from AAA to AA+, the first in American history.
Shareholders hope that the high sell-off from last week, when the Dow plunged 512 points, will not continue. The over 500-point drop was the worst day U.S. stock markets have seen since the 2008 financial crisis.
The White House called Standard & Poor’s decision “amateurish” and “breathtaking,” ABC News reports.
U.S. treasury officials found a $2 trillion dollar error in S&P’s findings, however the ratings firm still went ahead with their decision.
David Beers, global head of sovereign ratings at Standard & Poor’s, told ABC News he absolutely did not have any second thoughts about the decision to downgrade the U.S. debt rating.
The U.S. stock market opens at 9:30 a.m. on Monday.
