The major U.S. indexes closed well of their lows of the day, but that does not cover losses of more than 1% for the S&P 500, Dow Jones Industrial Average and the Nasdaq following Standard & Poor's slapping a ''negative'' outlook on the AAA rating on U.S.-issued debt. The Russell 2000 was the worst performer among the major indexes, plunging 1.6%.

Stats Table

For those of you that enjoy reading about the odds of an event occurring, the odds are one-in-three that S&P cuts Uncle Sam's AAA rating due to ballooning budget deficits and debt within the next two years, according to Bloomberg News.

''Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating,'' S&P said in a statement.

One analyst pointed out, and I tend to agree with this summation, that S&P may be trying to get ahead of the crowd with the ''negative'' outlook on U.S. debt because ratings agencies have been notoriously behind the 8 ball for far too long. Just look at the situation with the PIGS in Europe. S&P, Moody's and others were so far behind that curve that by the time they got around to cutting outlooks and ratings on sovereign debt issued by the likes of Greece and Portugal, spreads had already blown out and equity markets had already reacted.

Perhaps the silver lining in S&P's move to ''negative'' is that it is just one more catalyst to bring the budget debate front and center, making it a Main Street issue, which it is, not just a Capitol Hill/Wall Street issue. I will not get into politics, but I will point out that every year for the past 42, Congress has spent more than the revenue its takes in. Take a look at the chart below to get a sense for where some of the money goes.

Congressional Spending Chart

As you can now tell, it was a grizzly day for stocks, a fact highlighted by declines in 29 of the Dow's 30 members. Only Boeing (BA) traded higher and that is probably because of a ''Barron's bounce'' following the aerospace giant's appearance on the cover of the most recent issue of the financial magazine.

Financials were particularly ugly with Bank of America (BAC) and JPMorgan Chase (JPM) shedding 3% and 2%, respectively. Given those performances, it is almost a wonder that Citigroup (C), the third-largest U.S. bank by assets finished flat on the day after reporting that its first-quarter profit dipped 32% to $3 billion, or 10 cents per share, from $4.4 billion, or 15 cents a share, a year earlier as revenue tumbled 22% to $19.7 billion. Citi said its investment banking revenue fell 25% during the quarter.

As the previous reports from BofA and JPMorgan showed us, it is hard to find good cheer in this earnings season when it comes to bank stocks, but Citi CEO Vikram Pandit did make some slightly encouraging comments on today's conference call. Pandit said the bank wants ''to get to some sort of normalized dividend policy'' and ''With the stock trading below book value, it becomes awfully interesting to think about share repurchases as well.''

Citi has pledged to pay a dividend of a penny a share starting this quarter and the company will execute a 1-for-10 reverse split early next month to lower its enormous shares outstanding count. Only time will tell if those gambits result in meaningful returns for Citi shareholders.

Citigroup Chart

Also bucking the downward trend today was Halliburton (HAL), the world's second-largest oilfield services provider, which said its first-quarter earnings more than doubled to $511 million or 56 cents per share, compared with $206 million, or 23 cents per share, a year earlier as revenue climbed 40% to a record $5.28 billion. That is not a first-quarter revenue record for Halliburton; that is an all-time record. On an adjusted basis, Halliburton earned 61 cents a share. Analysts were expecting a profit of 58 cents on revenue of $4.87 billion.

The company said growth in land-based drilling projects is helping it cope with the mess in Libya and the federal government's slow permit approval process for new deepwater projects in the Gulf of Mexico. Halliburton President and CEO Dave Lesar was bullish in his outlook for the oil services group in 2011 and even said he is optimistic about Libya.

We will have plenty of news on oil services earnings this week at, but I will just briefly say this is a critical week of earnings for the Oil Services HOLDRs (OIH), which has been under some pressure lately. Counting Halliburton, roughly 38% of the ETF's weight reports earnings this week. For more energy news and commentary, register for the free OilSlick daily newsletter (HERE).

Halliburton Chart

Check out the chart of the Semiconductor HOLDRs (SMH), which is looking less-than-impressive with big earnings reports ahead this week.

Semiconductors HOLDRs Chart

There is a very good chance that the chart will look a little worse tomorrow following a disappointing first-quarter earnings report from Texas Instruments (TXN), the largest analog chip maker, today after the close. The company said it earned 55 cents a share on revenue of $3.39 billion, but analysts were expecting a profit of 58 cents on revenue of $3.4 billion.

The revenue number was at the lower end of the $3.34 billion-$3.48 billion TI forecast last month and the profit number missed the 56-60 cents a share the company was expecting. A charge of two cents a share was taken related to costs in Japan and this could be just the beginning of plenty of U.S. tech giants reporting slack results because of the tragedy in Japan.

For the second quarter, TI expects revenue of $3.41 billion to $3.69 billion and a profit of 52-60 cents. Analysts were expecting a profit of 62 cents on sales of $3.52 billion. That guidance includes Japan-related costs of a nickel a share. Investors are none too pleased as TI's shares are down 3% in the after-hours session as of this writing.

Intel (INTC), the world's largest semiconductor maker, reports its first-quarter numbers after the bell tomorrow and a disappointment there could send the Nasdaq and SMH careening lower. TI and Intel combine for more than 39% of SMH's weight.

Looking at the charts, the S&P 500 spent a good portion of the day below 1300 before a late-day rally lifted the index above that level, but there are problems here, not the least of which is that with 1300 having been violated on an intraday basis, that may give short-sellers more gumption going forward.

Below 1300, support looks to be 1285 while a move below 1275 could mean a retest of the March low around 1257. Headline risk is abundant this week and I am just talking about earnings. I will merely point out what looms on the earnings front tomorrow. High-beta names such as BTU and CSX step into the earnings confessional along with GS and Intel and several others. Thus far, earnings season has done the bulls no favors.

S&P 500 Chart

The Dow looks like it could be in trouble as Monday's action took the blue-chip index to a close below its 50-day moving average. Old support at 12,200 could turn to new resistance and that resistance could prove hard to break without the benefit of some strong earnings reports. Before the bell, JNJ announces, but this is a company littered with recall issues, so I would not expect much help there. INTC and IBM chime in after the close and those are the marquee Dow earnings for Tuesday. If the Dow cannot muster some upside from here, next support is 12,000.

Dow Chart

The Nasdaq might be in the worst shape of the major indexes at this juncture. Monday's close took the index well below its 50-day line and if the 2735 area is supposed to be support, that is where the Nasdaq came to rest when all was said and done on Monday.

AAPL and RIMM were both ended higher today, the latter because of a bullish piece in Barron's, but AMZN, GOOG and PCLN were all lower. If Intel and Apple do not step up big-time, 2700 could make an appearance this week.

Nasdaq Chart

Things were looking good for the Russell 2000 with the move above 830 on Friday, but that was all for naught as the index faltered today, closing just one point above its 50-day line. A move below 820 puts the lower end of the 800-810 range in play.

Russell 2000 Chart

I hate sounding alarm bells, but I view the next week as an important, to put it delicately, for stocks. There is no getting around that the fundamentals for most companies, particularly excluding financials, are quite strong. One can even make the argument that big tech names such as Google and RIM have been unjustly punished by one-off events in their recent reports. (I am referring to RIM's PlayBook spending and Google's hiring spree).

So maybe the market is just selling off in advance of the April 27 Federal Reserve press event. The problem is if Chairman Bernanke does not tell the bulls what they want to hear, the ''sell in May and go away'' crowd will have all the excuses they need to run the market even lower.