U.S. stocks slipped sharply on Monday as Standard & Poor's lowered U.S. credit outlook from " stable" to "negative," with all three major indexes losing over 1 percent.

Most Dow components sank. Bank of America dropped 3.12 percent, Caterpillar lost 3.09 percent and Alcoa declined 2.36 percent, leading the Dow's loss, while Boeing rose slightly by 0.26 percent, becoming the only one stock that survived the drop.

The Standard & Poor's 500 dropped 14.54 points, or 1.10 percent, to 1,305.14. The Nasdaq Composite Index was down 29.27 points, or 1.06 percent, to 2,735.38. All key S&P 500 sectors fell, led by energy and financial.

The Standard & Poor's Rating Service said on Monday that it downgraded its long-term outlook on the U.S. sovereign debt to " Negative" from "Stable." The New York-based rating agency said the country's deficit might offset its positive economic recovery over the next two years.

The S&P left its AAA rating for U.S. credit unchanged, but said there were "material risks" that U.S. policy makers might fail to deal with rising budget deficits and debt. "If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns," the agency said in a report on Monday.

In response, Assistant Secretary for Financial Markets Mary Miller of the U.S. Department of the Treasury noted that S&P emphasized "the importance of timely bipartisan cooperation and action on fiscal reform."

As to the economic news, the National Association of Home Builders said its index of homebuilder sentiment fell to 16 in April from 17 in March, disappointing the markets.

China raised its banks' reserve ratio by 50 basis points to a record high 20.5 percent in order to tackle high inflation pressure, tightening the monetary policy further.

In Europe, concerns about Greek and Portugal debt problems still lingered on.

And investors were disappointed on earning reports. Citigroup Inc., the third-largest U.S. bank by asset Monday reported a profit of 10 cents a share for the first quarter. While beating expectations with one penny, the bank still slipped 32 percent compared to the same period last year.

Texas Instruments will report earnings after the market closes, while Goldman Sachs and Johnson & Johnson release results before the market opens on Tuesday.

In the other markets, after the downgrade of U.S. credit outlook, crude oil prices dropped sharply, while gold price hit a new peak and silver also closed at a 31-year high.

VietNamNet/Xinhuanet