The U.S. stock markets opened at a loss of roughly two percent Monday on news of the S&P downgrade and the reaction overnight of global markets.

At the open Monday, the Dow Jones Industrial Average fell 228.95 points, or two percent, while the Nasdaq dropped 2.76 percent, down 67.55 points, while the S&P 500 index fell 1.86 percent, down 22.19 points.

The drop comes after the the Dow logged last week its steepest decline since March 2009, during the recession.

Dragging  the Dow lower was BofA, down more than eight percent, or 66 cents, to $7.51, and Alcoa, falling four percent, or 56 cents, to $12.23.

The CBOE Volatility Index, considered the best gauge of fear in the markets, traded near 32 Monday.

Overnight, the U.S. credit rating downgrade spread fear into global markets Monday, as Asian stocks plummeted on the development.

Hong Kong's Hang Seng Index and Japan's Nikkei 225 Stock Average slid more than two percent and the Shanghai Composite Index lost nearly four percent Monday.

Europe's debt crisis had already shaken global markets and the U.S. market in recent weeks, but Friday's downgrade by one notch of the U.S. debt rating from AAA to AA+ by the ratings agency Standard & Poor's shook more fear into global markets.

Global investors, and perhaps U.S. investors as well, could continue to send equity markets lower if they use the downgrade and global debt concerns to continue to shift investment strategy.

In Honk Kong and China, shares fell to their lowest since 2010, as retail investors sold bank stocks and cyclical industrials on the news of the U.S. debt rating downgrade.

"People are trading in fear at the moment," said Hong Hao, a global strategist at CICC, in an interview with Reuters.

Monday will be the first day of U.S. trading after Friday night's downgrade announcement by S&P and the news follows a volatile, harsh week on Wall Street. On Thursday, the Dow, Nasdaq, and S&P 500 indexes each shed four percent in trading.

Early Monday morning U.S. futures pointed to steep declines following the global sell-off in international markets. Futures for the S&P 500, the Dow Jones Industrial Average, and the Nasdaq 100 were down 2.4 to 2.8 percent.

In other developments related to the S&P credit rating downgrade and Europe concerns:

--Middle Eastern markets plummeted overnight Sunday, as Israel's benchmark TA-25 index fell seven percent, its biggest drop since October 2000.

--Oil futures traded sharply lower Sunday, while gold pushed to a new record near $1,700 before backing off slightly.

--In Europe, the FTSE and DAX are trading down 1.6 percent and 2.3 percent.