Just saw this too. Guesses on the stock market next week? I'm guessing at least -400 on Monday.
Institutionals will buy with that low of a drop, kicking up prices a little, just as the Dow rebounded today, so my bet is a net loss of 200-400 over the course of next week (low of 11200-11400) with some hectic 200 point swings, and maybe a dip below 11000 (automated buying won't sustain that drop, so a rebound to the 11200 will likely occur). That's just my bet...I really do want to see what happens, but I think just due to volatility we are going to see net 50-100pt/wk loss trends as non-volatile seeking investors park money in specific undervalued growth stocks and non-equities. Also, I bet you will see a commodities spike, depending what the fed says in response and what treasuries do. If there is a move out of treasuries, and the fed hints of monetization, expect a spike in oil and gold. If an investor is required to buy AAA, and they are contracted with s&p as their rating agency, they will have to move out of treasuries, which could also trigger de facto monetization if the fed tries to prop them up.
Good news? If we see an interest rate spike, even 1-1.5% Obama's debt limit raise won't last him till nov2012 as interest payments will short him significantly. Right now, our average interest rate is about 1.5-1.7%. Raising that by 1.5% would result in a 300-400B hit over the next 15 months...which could be good news for getting someone else in office.
I hope I'm wrong, and clueless.