Rating agency Moody's upheld its AAA rating for the United States Tuesday after Congress passed new legislation to raise the debt ceiling that averted a possible default.
But Moody's added a "negative outlook" on the grade, saying a historic downgrade could still come if fiscal discipline weakens or economic growth deteriorates significantly.
The S&P 500 turned negative for the year on Tuesday as the wrangling over the U.S. debt ceiling faded and investors turned their attention to the stalling economy.
The broad-based index fell for a seventh day and crashed through the key 200-day moving average in an ominous sign for markets. The seven days of losses mark the longest losing streak since October 2008.
"It is going to be a long week," said Jim Maguire Jr., a NYSE floor trader at E.H. Smith Jacobs. "The bid is not here in the market."
The selloff accelerated into the close as volume jumped well above average. The fall was broad-based, with four stocks falling for every one rising on the New York Stock Exchange.
The index also broke through its 2-1/2 year uptrend line from itsbear market low in March 2009. Thursday was the index's worst day in a year......"Investors have made the shift from Washington to what I'm calling economic realities," said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon.