U.S. investors will have their first chance Monday to react to Standard & Poor's decision to strip the U.S. government of its top credit rating. But the bigger issues facing Wall Street and stock markets worldwide remain debt-ridden countries in Europe and concerns that the global economy is weakening.
Friday's first-ever downgrade of U.S. long-term debt from AAA to AA+ wasn't unexpected and may have little impact on interest rates.
But it's the kind of news that stock markets don't need when investors are already nervous.
Even before the downgrade, the Dow Jones industrial average last week fell nearly 700 points, or 6 percent. Investors were worried because economic signals in the United States and overseas were pointing toward trouble:
On July 29, the government dramatically lowered its estimate of how much the economy grew during the first quarter. It had said the economy grew at an annual rate of 1.3 percent, but revised that number down to 0.4 percent.
European officials are trying to help Italy avoid the kind of bailouts that Greece, Portugal and Spain were forced to accept to prevent them from defaulting on their debt. But those bailouts haven't solved all the problems in those countries.
The first reports on the economy during the third quarter have been mixed. Manufacturing fell to its weakest level since July 2009 but the Labor Department said 117,000 jobs were created last month.
As a result, financial analysts interviewed Sunday said they expect markets to be volatile this week.
Former Federal Reserve Chairman Alan Greenspan, who appeared on NBC's "Meet the Press" Sunday, expects the selling to last for some time. "It is very unlikely that [this] isn't going to take a while to bottom out," he said.
"It depends on Europe, not the United States," Greenspan said.
He said that half of U.S. corporations operate in Europe, which "has been a very important driving force in the overall earnings of U.S. corporations."
The Dow fell 513 points on Thursday alone after concerns about Italy's problems were compounded by anxiety ahead of Friday's jobs report from the Labor Department. That report came in better than expected.
But it wasn't enough to calm investors. The Dow has fallen nearly 10 percent in two weeks -- a period that included the budget debate that averted a default on U.S. debt.
Greenspan noted that S&P had "hit a nerve" with its downgrade.
Economists had widely expected the U.S. economy to pick up in the second half of the year after its soft patch in the spring. But the stock market, which looks six to nine months ahead, doesn't see an improvement until well into 2012.