Futures prices indicate that the US stock market could open down 2.4 percent.
"Things can change reasonably quickly. I'm sure there are going to be a number of leaders trying to calm the markets. You just don't know what is around the corner at the moment,'' Mr Williamson said.
It was a broad sell-off but some recent star performers were hard-hit as investors took profits.
Ryman Healthcare had been a fantastic performer but the stock traded as low as $2.43 before closing down 1.94 percent at $2.53. Mainfreight fell 43c, or 4.16 per cent, to $9.90.
Fletcher Building fell 23c to $7.48, Contact Energy fell 12c to $4.91 and Telecom fell 8.5c to $2.485.
Fisher & Paykel Healthcare fell 7.63 percent to $2.30 and Abano Healthcare fell 5.13 percent to $4.25.
Today's early sharp fall came after the index plunged nearly 3 per cent on Friday, as investors feared further losses in US equities which had their worst selloff in two years on Thursday.
There have been similar drops in value in the Asian markets which have opened during the day.
Chinese shares dropped 4.78 per cent in late morning trade before limiting its losses to 4.00 per cent.
In Japan, the benchmark Nikkei was down 2.1 per cent in early afternoon trade, Hong Kong's Hang Seng tumbled 4 per cent and South Korea's Kospi slid 3.3 per cent.
Australia's S&P/ASX 200 index dropped 1.8 per cent. Singapore's benchmark dived 3.7 percent and Taiwan's market slid 2.6 percent.
Standard & Poor's downgrade of the U.S. sovereign credit rating to AA+ from the top-notch AAA, announced late Friday, was yet another blow to confidence in the struggling U.S. economy. It adds to growing fears that the world's number one economy may be headed back into recession.
Those anxieties have been compounded by signs that Europe's government debt crisis is threatening to engulf bigger economies such as Italy and Spain.
David Cohen of Action Economics in Singapore said the downgrade caused already nervous investors to flee riskier assets such as stocks but need not derail the U.S. economic recovery even if it is sluggish.
"Clearly, the downgrade fed the anxiety that was evident in global markets last week,'' Cohen said. "But we need not see another global financial crisis as long as people can calm down quickly enough.''
"I think it's still a matter of people being cautious given they don't really know how wildly these overseas markets will respond,'' Westpac Banking Corp. chief economist Bill Evans told Australian Broadcasting Corp. television.
"I would expect people will take the risk off the table at the moment waiting for some more clarity in those two big issues: how will the US respond to the downgrade and will the Europeans settle down these concerns in Europe?'' he said.
Meanwhile, a flurry of weekend activity by global finance officials gave rise to hopes of coordinated action to prevent a market meltdown.
Seeking to calm the panic spreading across financial markets, finance officials from the Group of Seven industrial countries issued a joint statement late Sunday saying they were committed to taking all necessary measures to support financial stability and growth.
The G-7 statement came after the group held an emergency conference call to discuss the debt crisis in Europe and market prospects following the announcement of the first-ever downgrade of the credit rating of the U.S. government.
The European Central Bank, meanwhile, said it will "actively implement'' a bond-purchase program that could boost Spanish and Italian bonds and drive down interest yields that threaten those countries with financial disaster.
The burst of activity underscored how government debt levels in Europe and the U.S. have unsettled financial markets and sharpened fears that debt troubles could derail the global recovery from the 2007-2009 financial crisis.
- HERALD ONLINE, AP
