Expect mayhem today in markets

But financial analysts warn: Do not panic

By CANDICE CHOI

Associated Press

NEW YORK

Investors should think twice before making any rash moves today.

Many market analysts expect stocks to fall sharply on Wall Street because of anxiety about the downgrade of the U.S. credit rating, the debt crisis in Europe and last week’s stock-market plunge. The temptation to bolt from any hint of risk is understandable. And right now, stocks look risky.

Asian, European and Australian markets have opened sharply lower today in reaction to ratings agency Standard & Poor’s downgrading of the United States government credit rating from AAA to AA+.

Futures pointed to losses on Wall Street when it opens this morning. Dow futures were off 225 points, or 2 percent, at 11,177 and broader S&P 500 futures shed 25.5 points, or 2.1 percent, to 1,172.42. And the jitters continue.

But financial planners say people who stick with their investment strategy will likely see their portfolios recover in the long run.

“The whole reason for having an investment plan is to make it easier to know what to do in times like these,” notes David Yeske, managing director of Yeske Buie, an investment firm based in San Francisco.

Still, that can be difficult to remember when faced with a seemingly endless stream of grim news.

Standard & Poor’s downgraded the country’s top AAA credit rating for the first time in history Friday. The ratings agency lowered the rating one notch to AA+. It said political fighting in Washington raised concerns about the government’s ability to solve its deficit problems.

Just a day earlier, the Dow Jones industrial average fell 513 points, its biggest drop since the 2008 financial meltdown. The plunge contributed to a nearly 10 percent slide in the Dow over the past two weeks. One reason for the drop: Italy looks like it could be the next European country to need a bailout.