Tornado Alley (PROG)

[StephanieVanbryce]

Sun Aug 7, 2011 7:23pm EDT ..U.S. stocks, oil, dollar fall on downgrade

By Ryan Vlastelica and Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - U.S. assets fell sharply in early electronic trading on Sunday in response to a downgrade of the U.S. credit rating by Standard & Poor's, while the euro rose on expectations of further bond purchases by the European Central Bank to deal with the euro zone's debt crisis.

S&P 500 stock futures fell 2.7 percent to 1,165.90, suggesting that in spite of the Standard & Poor's downgrade being rumored in markets last week, investors hadn't entirely priced it in. The rumors had contributed to the market's worst week since November 2008.

"We're set up for a pretty substantial selloff, with further erosion of the market as time goes on," said Jeffrey Sica, president and chief investment officer at SICA Wealth Management in Morristown, New Jersey. "There's a real decline in confidence right now."

Among other assets, crude oil slumped 3.6 percent while gold -- typically viewed as a safe-haven investment -- climbed 2.5 percent. The U.S. dollar index .DXY fell 0.3 percent while the euro jumped.

Reaction in the U.S. government bond market was mild, with 30-year long bond futures down moderately at the start of electronic trade in Asia and 10-year futures up slightly.

The 30-year T-bond future fell 12/32 in price at the open to 131-26/32. The 10-year T-note future rose 5/32 to 127-6/32.

Following a conference call held by the European Central Bank on Sunday, a euro zone monetary source said the ECB will intervene "significantly" to protect Italy and Spain from the debt crisis, indicating it would buy government bonds of the euro zone's third and fourth biggest economies.

A statement from the ECB said it would "actively implement" its bond-buying programs.

The U.S. dollar took a further beating against the safe-haven Swiss franc and Japanese yen, though markets were aware of the possibility of intervention by the Bank of Japan and Swiss National Bank to stem their surging currencies.

The dollar fell against the Swiss franc to 0.7570 franc from 0.7671 on Friday. It also lost ground against the yen to 78.01 yen from 78.38 on Friday.

The move by S&P drew criticism from some of the world's largest investors.

"Obviously, we're going to get freaked out a little bit and the dollar will get hit, but it's only going to be for a couple of days," said John Taylor, chairman and chief executive officer of FX Concepts, the world's largest currency hedge fund.

"This downgrade is not that important and if you ask me, too silly. The U.S. is in a much better position than any, I repeat, any European country," Taylor added.

There's more
http://www.reuters.com/article/2011/08/07/us-markets-global-idUSTRE7725BC20110807

............will it get better later ? ..(imo yes,) maybe NOW!