Stocks are deeply in the red at mid-day, following Standard & Poor's Friday downgrade of U.S. debt, while more downgrades this morning of Freddie Mac, Fannie Mae and other agencies with U.S.-related debt rippled across the market.
Standard & Poor's this morning downgraded the credit rating of entities that are tied to long-term U.S. debt, cutting Fannie Mae and Freddie Mac, as well as government-backed debt issued by 32 banks and credit unions, farm lenders and three major clearinghouses that execute stock, bond and option trades, AP reported.
S&P dropped Fannie and Freddie and the other ratings to AA+ from AAA, mirroring its move on U.S. debt.
The major indexes are off their early lows, but still deep in the red, with the tech-heavy Nasdaq composite index leading, down 3.89%, followed by the S&P 500, down 3.77%, and the Dow off 3%.
In company news:
Bank of America Corp. ( BAC ) is down while the bank faces more legal problems over its mortgage operations. American International Group Inc. ( AIG ) filed suit against the bank in New York, alleging "massive fraud" on soured mortgage debt that led to $10 billion in losses for the insurer. The suit names the bank, its Countrywide mortgage subsidiary and its brokerage arm, Merrill Lynch, for misrepresenting the quality of mortgages placed in securities and sold to investors. AIG claims it lost $28 billion.
Teva Pharmaceutical Industries ( TEVA ) is down after Bloomberg reported that the company is being sued by a joint venture of GlaxoSmithKline Plc ( GSK ) and Pfizer Inc. ( PFE ) for infringing a U.S. patent for the HIV drug Epzicom.
News Corp. (NWSA), hit hard by a hacking scandal, is facing a new probe into the use of drones to gather news at its U.S.-based publication The Daily. The Federal Administration Aviation is investigating whether The Daily's use of "unmanned aerial systems" violates FAA regulations. Companies that use unmanned aircraft in business must first obtain a permit, according to FAA rules. The Daily allegedly used drones to film flood damage in North Dakota and Mississippi.
L-3 Communications (LLL) dips after Bloomberg reports that Relational Investors LLC cut its stake in the company to 3.7% from 6%.
Merck (MRK) is down after theflyonthewall.com reported that the health care giant disclosed in a regulatory filing that the Department of Justice issued a subpoena requesting information related to the company's marketing and selling activities.
Cisco (CSCO) is firmly lower ahead of the company's fourth quarter earnings report due Wednesday. Analysts polled by Thomson Reuters expect the company to a profit of $0.38 per share on revenue of $10.97 billion.
Best Buy (BBY) is down after Barron's says the shares may slide if management can't figure ways to retake market share from online competitors such as Amazon (AMZN).
Commodities are mixed. December gold contracts are up 3.63% to $1,712 an ounce while September crude oil contacts are down 4.03% to $83.38 a barrel.
In energy ETFs, the United States Oil Fund (USO) is down 4.01% to $32.59 and the United States Natural Gas fund (UNG) is up 0.1%, to $9.97.
In precious metal ETFs, the SPDR Gold Trust (GLD) is up 2.70% at $166.11. Market Vectors Gold Miners (GDX) is up 3.95% to $57.60. iShares Silver Trust (SLV) is up 2.38% to $38.21.
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