U.S. Stock Futures Tumble After Ratings Cut

U.S. stock futures fell sharply on Sunday following the steepest weekly retreat since 2008 as traders reacted to Standard & Poor's downgrade of America's credit rating and ongoing concerns over the euro zone debt crisis. 

In early trading Sunday evening, Dow Jones Industrial Average futures plummeted 258 points to 11,144, S&P 500 futures tumbled 27.8 points to 1,170 and Nasdaq 100 futures slid 45.8 points to 2,141. 

                                                                                                                                       
For the first time in history, S&P cut America's top-notch credit rating one notch to AA-plus

from AAA after the close of trading on Friday.  The ratings company also said it may slice the ratings another notch over the next two years.  

The move came as a result over concerns over the country's substantial public debt burden and deep divides within Congress that almost sparked an unprecedented default on U.S. sovereign debt.  Moody's Investor Service, another ratings company, affirmed American's AAA rating, while Fitch is still performing a review. 

The response by large investors has been mixed. BlackRock said Sunday the move by S&P "does not imply a fundamental increase in risk" and shouldn't prompt investors to "change their behavior solely on the downgrade."  However, the company that manages $3.7 trillion in assets warned that "continued economic weakness and regulatory uncertainty ... may provide a signal to some investors to reassess their riskappetite."

Berkshire Hathaway chief Warren Buffett told FOX Business' Liz Claman the downgrade "doesn't make sense" and would not tempt the company to sell its $40 billion portfolio of Treasury bonds. 

Meanwhile, traders were paying close attention to the expanding euro zone debt crisis.  The European Central Bank said Sunday it was prepared to "actively implement" a program by which it would purchase Italian and Spanish debt.  European credit markets have been rattled as debt worries have cascaded from smaller economies like Greece to more substantial ones like Italy.  

The Group of 7 finance ministers was also holding a conference call on Sunday, and possibly releasing a statement, to calm global equity markets that were slammed last week, according to a report by Reuters. The broad S&P 500 plunged 7.2% last week the worst performance since November 2008, during the financial crisis.  

In a sign of the uneasiness on Wall Street, gold, seen as a safe haven, jumped $36.20, to 2.1%, to $1,686 a troy ounce. Energy markets were deep in the red in electronic trading on Sunday. 

Light, sweet crude dipped $2.63, or 3%, to $84.25 a barrel. Wholesale RBOB gasoline slid 5 cents, or 1.5%, to $2.75 a gallon. The U.S. dollar slumped 0.22% against a basket of world currencies, while the euro gained 0.22% against the greenback.