* S&P revises U.S. outlook to 'negative'
* Materials, oil fall after China's move to curb liquidity
* Greece denies it is seeking debt-restructuring plan
* Dow off 1.2 pct, S&P down 1.1 pct, Nasdaq off 1.2 pct
* For up-to-the-minute market news see []
(Updates to afternoon trading, changes byline)
By Ryan Vlastelica
NEW YORK, April 18 (Reuters) - U.S. stock indexes fell
more than 1 percent in heavy volume on Monday after Standard &
Poor's downgraded the credit outlook of the United States,
adding to worries about the global economy after China moved
to curb liquidity.
Investors also focused on Greece, where financial markets
are increasingly convinced the country will have to
renegotiate the terms of its public debt. Greek officials
denied that some form of debt rescheduling was imminent. For
details see [].
The CBOE Volatility Index <.VIX> rose 11.2 percent, after
earlier climbing as much as 24.5 percent, its largest daily
percentage jump since Feb. 22. It closed on Friday at its
lowest since July 2007. For details, see []
S&P downgraded its outlook on the United States credit
rating to negative, saying it believes there's a risk U.S.
policymakers may not reach agreement on how to address the
country's long-term fiscal pressures. []
"We're a little surprised that the VIX is as low as it is,
since market risks have risen and there's been some
complacency," said David Joy, chief market strategist at
Columbia Management in Boston, which oversees $347 billion.
Joy added that Columbia Management had taken some short-term
exposure off the table.
The stock market's vulnerability was demonstrated by its
strong sell-off. In comparison, the reactions of the U.S.
Treasury debt and dollar markets were more subdued. See []
and []
"The behavior of the bond market suggests that we could
get a rebound in stocks, at least one related to the S&P
news," Joy said. "I'm not so sure we'll get a rebound related
to Europe."
The Dow Jones industrial average <> was down 147.35
points, or 1.19 percent, at 12,194.48 The Standard & Poor's
500 Index <.SPX> was down 14.65 points, or 1.11 percent, at
1,305.03. The Nasdaq Composite Index <> was down 32.34
points, or 1.17 percent, at 2,732.31.
In Monday's sell-off, the S&P 500 fell below 1,300 for the
first time since March 24. Short-term support is seen near the
1,285 area.
On Friday, the S&P 500 fell for a second week as concern
spread that growth expectations may have to be trimmed.
As investors move to companies expected to outperform in
uncertain economic times, the defensive S&P 500 sectors like
utilities <.GSPU>, consumer staples <.GSPS> and healthcare
<.GSPA> posted the smallest losses in Monday's slide.
Citigroup Inc <C.N> rose 0.9 percent to $4.46 after it
reported a first-quarter profit that was slightly higher than
expected, while Eli Lilly & Co <LLY.N> fell 0.6 percent to
$35.78 on concerns about looming generic drugs competition.
[] []
Mitch Rubin, chief investment officer at RiverPark
Advisors in New York, said the day's earnings suggested
volatility in the near term.
"Market movement will be driven by earnings, and we've
seen a lot of mixed results," Rubin said. "There's been
disappointment about bank results."
China raised banks' required reserves on Sunday for the
fourth time this year, extending the fight against excessive
liquidity and stubbornly high inflation in the world's
second-largest economy. []
Caterpillar Inc <CAT.N>, hurt both by expectations of
ballooning funding costs and China's move to harness
liquidity, slid 3 percent to $104.02.
China's move and the cut in the U.S. credit outlook hurt
basic materials and crude prices, sending the
Reuters/Jefferies CRB index of commodities <.CRB> down 0.9
percent.
Exxon Mobil Corp <XOM.N> dropped 1.7 percent to $82.86
while fellow Dow component Alcoa Inc <AA.N> fell 2.4 percent
to $16.13.
(Reporting by Ryan Vlastelica; Editing by Jan Paschal)
