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Historically bad day on Wall Street as Dow tanks

Trader Patrick Garvey reacts Monday at the close of trading in the S&P 500 Futures pit on the floor of the CME Group in Chicago. Stocks plummeted at the close after anxiety overtook investors on the first trading day since Standard & Poor's downgraded America's credit rating. AP Photo/M. Spencer Green

The hot market tip of the day: Stay the course. The country's financial sector took a hit Monday following the Standard's & Poor's downgrade of the United States' credit rating from AAA to AA+ on Friday.

After the markets closed at 3 p.m. Monday, the Dow Jones Industrial Average, which shows how the largest 30 publicly owned companies fared during the day's trading on Wall Street, fell 634 points to 10,809, or 5.5 percent, according to Lynnea Pritchett, a financial adviser for Edward Jones in Willmar.

She said the reaction to sell by investors was natural with the increased market uncertainty.

"Even though the downgrade wasn't a big surprise, the impact it has on the market is uncertain," Pritchett said.

"The market might be reacting negatively but we advise to stay the course and not overreact to headlines."

She said now is actually a great time to buy stock as she fielded several phone calls from worried investors on Monday.

"Some clients can't stomach the news when it goes down, but others see this as a great buying opportunity," Pritchett said. "If you're a long-term serious investor, market decline is a great opportunity."

In a report filed by the S&P on Friday, the blame for the downgrade was on the U.S. Congress and President Obama because, "we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process," the report said.

The S&P, an independent credit ratings provider, is also to be blamed, according to Jay Roley of Spicer.

Earning two-thirds of his income from mutual funds and independent stocks, Roley said the decision to downgrade the credit rating was premature.

"I don't think they did the right calculations and their short-sightedness caused a big problem," Roley said. "When you have the number one country on the planet, you don't deserve a credit downgrade because that can send the whole world into chaos."

Roley, who was buying sweet corn Monday afternoon on First Street in Willmar, said he saw the decline in the stock market coming and sold.

"I played it safe, but I should have taken more," Roley said.

While Monday's 5.5 percent decrease is significant, the stock market has seen worse and rebounded quickly, Pritchett said, stating some companies continued to pay dividends during the Great Depression.

"Even though the stock market is down, that doesn't mean the business has stopped," she said. "When the market does move, it moves greatly. It can move a lot in one day."

Mary Johnson, of Raymond and co-owner of Johnson Premium Sweetcorn, was selling vegetables Monday afternoon on First Street. She said she doesn't follow the market much, but knows that when it doesn't do well, it hurts crop prices.

"I'm hoping it will rebound, but I am uncertain," she said.

And it's the uncertainty that causes the problem, Pritchett said. Offering advice and support to many clients around Willmar, she said there is one main piece that investors should remember.

"Just because something moves up and down in value doesn't mean it's not a safe place to invest in," she said. "The key is to buy quality and be diversified -- you don't want all your eggs in one basket."