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The agency's move came late Friday after a wild week for stocks -- its worst in more than two years -- as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies hit sentiment.

The impact of S&P's rating cut was felt in Asia and Europe. Japan's Nikkei stock average .N225 slid 2.2 percent at the close on Monday, while the FTSEurofirst 300 index .FTEU3 of top European shares fell 1.8 percent in early trading after a bounce following the European Central Bank's move to buy Spanish and Italian bonds.

Peter Cardillo, chief market economist at Rockwell Global Capital in New York, said he expected an intraday reversal after sharp falls at the open, similar to Friday's action.

Hedge funds are "selling out at levels that they are somewhat compelled to, so it feeds on itself said," he said. "The market is grossly oversold, valuations are attractive, and I think the market at this point has already discounted a growth slowdown."

S&P 500 futures fell 24.8 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 213 points, and Nasdaq 100 futures shed 49.25 points.

Last week's steep selloff in equities wiped about $2.5 trillion off global market valuations.

Safe-haven assets were in demand. Gold hit another record high of $1,715.01 an ounce and was set for its second largest daily gain this year.

Resource-related stocks will be under pressure as crude oil prices fell 3.3 percent to $84 a barrel on concerns over the economic outlook. Copper fell to a five-week low.

Sentiment worsened after the S&P cut the U.S. long-term credit rating by a notch to AA-plus late Friday on concerns about the debt situation in the world's largest economy. The downgrade could eventually raise borrowing costs for the U.S. government, companies as well as consumers.

Moody's on Monday repeated a warning it could downgrade the U.S. rating before 2013 if the fiscal or economic outlook weakens significantly, but said it saw potential for a new debt agreement in Washington to cut the budget deficit before then.

Analysts said the S&P 500 index could test Friday's intraday low of 1,168.09. Some trader look for a pullback to the 32.8 percent retracement of the rally from the index's bear market low on March 2009. That level is around 1,100.

(Editing by Jeffrey Benkoe)