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Traders work in the Merrill Lynch booth on the floor of the New York Stock Exchange (NYSE) (Spencer Platt/2008 Getty Images)
Traders work in the Merrill Lynch booth on the floor of the New York Stock Exchange (NYSE) (Spencer Platt/2008 Getty Images)

At the open: S&P cut hits stocks Add to ...

North American stocks fell sharply at the start of trading on Monday after Standard & Poor's raised an issue that has been on the minds of many investors: The prospect of a credit downgrade for the world's largest economy.

Standard & Poor's cut its credit ratings outlook for the United States to negative from stable, while maintaining the country's top, triple-A rating. The rating agency said that there was a one-in-three chance of an actual downgrade within the next two years.

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The Dow Jones industrial average fell 160 points or 1.3 per cent, to 12,182. The broader S&P 500 fell 16 points or 1.2 per cent, to 1,303. In Canada, the S&P/TSX composite index fell 111 points or 0.8 per cent, to 13,688.

The downturn was widespread, affecting all 30 stocks within the Dow. Among the hardest hit: Caterpillar Inc. fell 2.5 per cent, Bank of America Corp. fell 2.2 per cent and Chevron Corp. fell 1.9 per cent.

Commodity producers weren't immune from the selloff, after crude oil fell to $108.34 (U.S.) a barrel, down $1.32. Suncor Energy Inc. fell 2.8 per cent.

Gold, which usually thrives off financial uncertainties, rose $5 an ounce to $1491. Among gold producers, Barrick Gold Corp. rose 0.6 per cent.

Meanwhile, Citigroup Inc. was a notable exception to the downturn, rising 1.3 per cent after it reported a 32 per cent slide in its first quarter earnings. Earnings fell to $3-billion (U.S.) or 10 cents a share, down from 15 cents last year. However, the results topped analysts' expectations for earnings of 9 cents a share.

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