U.S. Stocks Drop In Response To Standard & Poor's Biggest Weekly Drop Since 2008

U.S. stocks retreated today amid concern that, were S&P to downgrade the nation's credit rating, an economic slowdown could be imminent. According to Bloomberg, Bank of America Corp. (BAC) and Citigroup Inc. (C) slumped at least 5.4 percent, pacing losses in financial shares. Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), meanwhile, declined more than 2.7 percent as oil futures tumbled to trade at an eight-month low. As speculation grew that S&P was preparing to strip the U.S. of its AAA rating for the first time, the index slid. “The once-unthinkable loss of the AAA rating will constitute a further hit to already fragile business and consumer confidence,” Mohamed A. El-Erian, chief executive officer and co-chief investment officer at Pacific Investment Management Co., wrote in an e-mail Aug. 6. “Americans will face higher credit costs over time.” The U.S. downgrade will “reinforce this really uncertain financial market climate that we are confronting right now,” David Rosenberg, the chief economist for Gluskin Sheff & Associates Inc., in Toronto, said to Bloomberg. “You're probably going to see investors becoming more defensive. That means that they are moving to Treasuries or to cash or to gold.” Barton Biggs said he's “taken some risk off” his investments at his hedge fund Traxis Partners LP. “I've taken some risk off, and I hate to do it, I think its probably the wrong thing to be doing,” Biggs, who helps manage $1.4 billion as managing partner and co-founder of Traxis, said in a Bloomberg Television interview. “But I'm a fiduciary to a certain extent, and I've got to protect my capital.”