The Israeli stock market plunged more than six percent upon opening Sunday following the downgrade of the U.S. credit rating.
The fall triggered a series of brief, mandatory suspensions in trading, after which the market stabilized but did not immediately recover.
International markets are expected to drop this week, after the credit rating agency Standard and Poor's lowered the United States' rating from triple-A to double-A-plus late Friday.
The agency has defended its decision, saying U.S. plans to lower long-term debt did not go far enough.
The Israeli market may also have been influenced by massive protests Saturday against the high cost of living. An estimated 250,000 people took part in the demonstrations in Tel Aviv, Jerusalem and other cities.
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Speaking before a weekly Cabinet meeting Sunday, Israeli Prime Minister Benjamin Netanyahu promised economic reforms to try to bring costs down.
The prime minister appointed a team to study the protesters' demands but cautioned he would not be able to satisfy everyone.