American Capital Agency Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of American Capital Agency (NAS: AGNC) fell 22% briefly this mornings in a mini flash crash.

So what: A couple of things are going on here. Investors are concerned that mortgage REITs will be crushed if the U.S. defaults and is downgraded, which would lead to higher borrowing costs. A massive spike in volume -- with nearly 2 million shares trading hands in a minute -- brought the stock to today's low.

Now what: Our good friend Fat Finger Freddy was at it again today, flooding the market with more shares than it could handle. Luckily, the sell-off didn't last long, and shares spiked higher and are currently down just 2.4%. I would be leery of mortgage REITs in coming weeks, as a U.S. downgrade could mean an end to their cushy spreads.

Interested in more info on American Capital Agency? Add it to your watchlist.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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