MW:U.S. stock futures sink, gold soars after S&P move
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Wall Street was set for a sharply lower opening Monday after the unprecedented downgrade of U.S. debt by Standard & Poor’s, while gold futures soared nearly $60 as investors sought a safe haven.
Futures on the Dow Jones Industrial Average DJ1U -2.08% slumped 234 points to 11,165. Futures on the Standard & Poor’s 500 index SP1U -2.35% dropped 29.10 points to 1,168.70 and those on the Nasdaq 100 ND1U -2.58% sank 56.25 points to 2,130.75.
After the close of Wall Street trading on Friday, Standard & Poor’s downgraded the U.S. government’s AAA debt rating to AA+, and assigned it a negative outlook. The agency said the U.S. political system had become less stable and the deficit-reduction deal reached by lawmakers last week was not extensive enough. Read U.S. triple-A debt rating cut
The news provoked sharp losses in Asia and the Middle East. Stocks in Europe also tumbled, with the Stoxx 600 XX:SXXP -1.91% down 1.9%. European stocks gave up earlier gains that came after the European Central Bank said late Sunday it would “actively implement” its bond-buying program in an effort to calm market fears that the euro-area debt crisis will spread to Italy and Spain.
Financial markets seemed to pay little attention to a statement from the Group of 20 nations which said Monday they stood ready to take “all necessary initiatives” to “ensure financial stability and liquidity in financial markets.” That follows a similar G-7 statement on Sunday. Read G-7 seeks to calm market's debt jitters
Many market commentators had been predicting a Black Monday-like opening in the wake of the S&P move, noted Steen Jakobsen, chief economist at Saxo Bank.
“People will start very, very defensively, but if the market keeps momentum into the close, you could see a rally in markets in New York,” said Jakobsen.
Investors, clearly rattled by the S&P move were still rushing to perceived safe-haven investments, such as gold. Gold futures for December delivery GC1Z +3.44% rallied nearly $60 to $1,708.40 an ounce.
Crude-oil futures for September delivery fell $3.04 to $83.84 a barrel.
The U.S. dollar index DXY -0.08% , which measures the dollar’s performance against a basket of six other major currencies, fell to 74.359 from 74.592 in North American trade late Friday. The euro EURUSD -1.10% rose to $1.4318, from $1.4269 in late North American trading Friday.
U.S. stocks suffered heavy losses last week. The Dow Jones Industrial Average DJIA +0.54% fell 5.8% last week, its worst weekly performance since March 6, 2009, while the S&P 500 index SPX -0.06% fell 7.2% on the week, its worst since late 2008. The Nasdaq COMP -0.94% finished the week down 8%, its worst since late 2008 as well.
