US Stocks sink after U.S. outlook slashed (ext)

NEW YORK (CNNMoney) -- U.S. stocks cut some losses late Monday afternoon, but still finished the session sharply lower after Standard and Poor's cut its long-term outlook on U.S. debt to negative.

"I would say investors have been anticipating this somewhat, but when the shoe falls, it sends a vibration throughout the market," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

The Dow Jones industrial average (INDU) sank 140 points, or 1.1%. The S&P 500 (SPX) fell 15 points, or 1.1%, and the Nasdaq Composite (COMP) lost 29 points, or 1.1%.

Earlier in the session, all three indexes were down 2%.

S&P kept its "AAA'"-rating on the world's largest economy, but said it was concerned about the United States' ballooning deficit. While President Obama and GOP leaders have unveiled separate plans to reduce the U.S. deficit, the ratings agency said "the gap between the parties remains too wide."

Gold, a safe-haven commodity, got a boost, with prices up $6.90, or 0.4%, to settle at a record $1,492.90. Earlier, prices climbed to an intraday record of $1,498.60.

The dollar also climbed, rising 1.4% versus the euro and 0.4% against the British pound. The dollar index, which measures the greenback against a basket of currencies, increased 0.8%.