The blood flowed as the stock markets finally reacted to Standard & Poor's Friday night downgrading of the U.S. credit rating from AAA to AA+: The Dow fell 634.76 points (5.55%) to end at 10,809.85, the S&P 500 dropped 79.92 points (6.66%) and the Nasdaq lost 174.72 points (6.90%). Yes, it felt a little like December 1, 2008.

Bloomberg News reports, "The downgrade extended a rout that had wiped out $1.94 trillion in market value from the country’s stocks amid concern the economic recovery is at risk." As the NY Times put it, "The declines... followed losses in global markets and set United States equities on track to extend losses that for some recalled the days of the 2008 financial crisis. They also reflected anxiety over the United States economy and Europe’s debt woes.

One analyst said, "Fear is rampant in the market right now, the fear that we will have a double dip recession. it is too early to call that, but once the fear bubbles up it can treat the market very harshly." And one chief investment officer told Bloomberg News, "There’s no reason to get in front of this train. Yes, there’s cheapness in the stock market, but right now emotions are high. There’s enough uncertainty out there. People are moving towards no risk. That includes Treasuries, which is ironic."

The Federal Reserve is meeting tomorrow (will they remain cool?). CNBC says, "While most analysts still expect the Federal Reserve to not make any major changes in policy at its meeting on Tuesday, some are beginning to wonder whether the market disruptions of recent sessions warrant some kind of central bank intervention."