S&P Threatens To Downgrade $12 Billion in Subprime Mortgage Backed Securities

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“The fallout of the subprime meltdown on financial services companies that hold some of the debt creates some risk to earnings.  The financials make up over 25% of earnings for the S&P 500, so a series of disappointments in financials can have sizable effects on the overall tally.”

Jeff Kleintop (free), Chief Market Strategist, LPL Financial 

I think we’re going to be seeing [credit rating] downgrades, and we’re just seeing the start of it.  The problem in the subprime market is having a big impact.”

Maryann Hurley (subscription required), Vice President, D.A. Davidson

Well, I wrote about a couple Sunday nights ago and now it’s starting to happen: S&P has put $12 billion in subprime mortgage backed securities on negative credit watch (subscription required) with the implications that they might be downgraded in the next few days.

As of right now (2:20pm EST):

Dow: -98

S&P: -15

Nasdaq: -23

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