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

“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