Wall Street analysts are downplaying the plunging U.S. stock market, as the decision by Standard & Poor's to downgrade mortgage lenders Fannie Mae and Freddie Mac sends the Dow tumbling 249 points. The major indices had already gotten off to a rough start this morning, with the Dow dipping as much as 300 points on the first day of trading since Standard & Poor's downgraded U.S. debt on Friday. But a number of analysts speaking to the major financial news services say the dip is a result of short-term panic rather than a more foreboding reaction to grim economic realities. Here's what they're saying:
It's a panic, says Jeffrey Saut, chief investment strategist at Raymond James & Associates. “There are no fundamental reasons for the selloff. We’re not going into a recession. We had a terrific earnings season. Now is not the time to panic. This is where you start to put cash back to work.” CNN Money notes that Fannie and Freddie had it coming as "it was widely expected that S&P's downgrade of U.S. debt would roll downhill to other entities that are closely linked to the federal government."
It's short-term scare, says Jay Suskind, senior vice president at Duncan-Williams, in an interview with The Wall Street Journal. "The initial reaction with most things problematic in the market is to sell and ask questions later. [But traders] have had over 48 hours to think about what they're going to do at 9:30. I think you'll start to see some buying later on." An analyst speaking with CNN Money adds, "The only time a rating agency should move the markets is when they discover something that nobody else has seen. All they're doing is telling us what we already know, and they're spanking the government."