S&P Cuts Bear Stearns' Rating

S&P cut its long-term counterparty rating on Bear Stearns to "BBB" from "A" and its short-term rating to "A-3" from "A-1."

S&P said Bear Stearns' need for temporary financing to continue operating normally led to the downgrade. Earlier Friday, Bear Stearns said it is receiving a financing line from JPMorgan Chase that is secured by the Federal Reserve Bank of New York.

The agency also placed the bank's long- and short-term ratings on negative watch, meaning they could be downgraded in the next three months.

Bear Stearns shares plunged $22.09, or 39 percent, to $34.95 in afternoon trading, after hitting $26.85 earlier.