EU Contagion Fears Bloodied The Street

Dow Back Below 11000 Pivotal;
First 200-points Plunge Since February

Stocks were absolutely hammered today, with traders panicking in the wake of debt downgrades for Greece and Portugal. Standard & Poor's slashed its rating on Greek government debt to junk status, announcing, "Greece's economic and fiscal prospects lead us to conclude that the sovereign's creditworthiness is no longer compatible with an investment-grade rating." S&P now maintains a "BB+" rating on Greek debt -- which, as The Wall Street Journal noted, is on par with its sovereign debt rating for Azerbaijian. Meanwhile, Portugal's debt was downgraded by two notches, with S&P maintaining a negative outlook on both countries.

While most equities plunged into the red out of the gate, Goldman Sachs Group (GS) was a notable outlier. Shares of the banking behemoth ticked higher today as accused trader Fabrice Tourre "categorically" denied any involvement in securities fraud before a Senate subcommittee.

"Quoting a Goldman e-mail: 'boy that Timberwolf was one [expletive] deal' ... You knew it was a [expletive] deal and that's what your e-mails show. How much of this [expletive] deal did you continue to sell to your clients?"

The Dow Jones Industrial Average (DJIA – 10,991.99) suffered a massive blow today, ending below 11,000 for the first time since April 9. The Dow also settled below its 20-day moving average, breaching this trendline for the first time in more than two months. The blue-chip barometer gave up 213 points today, or 1.9%, as all but two of its 30 components closed lower. Caterpillar and Alcoa paced the 28 decliners, while 3M Company bucked the bearish bias in the wake of well-received earnings, and Wal-Mart Stores finished flat.

The S&P 500 Index (SPX – 1,183.71) followed suit with a plunge of 28.3 points, or 2.3%, ending its five-day streak above the 1,200 level in the process. Like the Dow, the SPX ended on the south side of its 20-day moving average for the first time since Feb. 12.
Finally, the Nasdaq Composite (COMP – 2,471.47) tumbled below the 2,500 region, ending the day on a drop of 51.5 points, or 2%. However, the COMP one-upped its peers by finding support at its 20-day trendline.

Hope this is just another kneejerk reaction

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