To succeed as a trader on the floor of the New York Stock Exchange you have to a steely disposition. Traders know the rhythms of the market. And they don't usually flinch, not even at the top of a rollercoaster.
But as the market opened Monday, dropping nearly 250 points almost immediately, some traders couldn't help but betray their nerves.
Art Cashin, floor director at UBS Securities, has worked on the floor of the Exchange for 50 years. He likened the situation Monday to watching a patient recovering from chest pain as he walks down the street. "You wait as they catch their breath, and see if they can walk on," Cashin said. "But the symptoms are concerning."
For the first time in history, credit rating agency Standard & Poor's "put a downgrade on America," as many traders put it, lowering its credit rating from the highest, AAA, to AA+. The country had held the AAA rating since 1917.
Global markets are more interlinked then they ever have been before. As a whole, companies in the Standard & Poor's 500 index now reap half their profits overseas. But in Europe, a debt crisis threatens to spill over into the continent's third and fourth largest countries, Italy and Spain. Still-developing countries like Brazil and China are no longer the engine of growth they have been since the financial crisis in 2008. Add to that slowing economic growth in the U.S. and unemployment that is over 9 percent.
"It's a perfect storm," said Allan Valdes, director of floor trading at DME Securities. "In the long run, it's troublesome."
As if that weren't enough to make traders on the floor at the stock exchange nervous, at a time when the markets need the U.S. to be a decisive global leader, lawmakers instead appear dysfunctional, traders said.
"It has a huge psychological impact," said Doreen Mogavero, founder of trading firm Mogavero, Lee & Co. "It erodes confidence."
Early in the day, trading volume was light indicating that many stockholders were staying on the sidelines to see what might happen throughout the day. But some traders said they expected the sell-off to continue.
"We have not seen that bottom yet," said Jonathan Corpina, a trader with Meridian Equity Partners. "When you get hit like this, everyone's going to get hit by it."