Standard & Poor's cut its long- term sovereign credit rating on Greece to junk status on Tuesday, suggesting further downgrades were possible.

Greece's ratings were lowered by three notches to BB+, the highest junk-level rating as the ratings agency said medium-term financing risks related to the government's high debt burden are growing despite the government's already sizable fiscal consolidation plans.

"The downgrade results from our updated assessment of the political, economic and budgetary conditions that the Greek government faces in its efforts to put the public debt burden onto a sustained downward trajectory," said Marko Mrsnik, an S&P credit analyst, in a statement.

S&P's outlook on Greece is negative, meaning the agency could downgrade the rating again.

U.S. stocks were hit badly after the downgrade, with all three major averages tumbling more than 1.5 percent, pressured by intensified concerns that the debt crisis in European countries were spreading faster than people expected.