Stock prices fall as Wall Street loses a little more momentum after its run so far this year. The S&P 500 was down 0.7% on Wednesday and was on course for a second straight day of losses after hitting a 16-month high. The Dow slipped 125 points, or 0.4%, and the Nasdaq Composite was down 1.1% shortly after the open. Bond market returns were mixed after Fitch Ratings downgraded the US government’s credit rating. The downgrade hits at the heart of the global financial system, but the market’s reaction has so far been more muted than after a similar downgrade in 2011.
This is a recent update. `’s earlier story follows below.
Wall Street is expected to open lower on Wednesday after the US government’s credit rating was downgraded for the second time in history.
Futures for the Dow Jones Industrials slipped 0.3% before the bell and futures for the S&P 500 fell 0.5%.
Investor optimism was dampened by Fitch Ratings’ downgrade of the US government’s credit rating, citing mounting debt at federal, state and local levels. The rating was downgraded by one notch to AA+ from AAA, the highest possible rating, on Tuesday. In 2011, the rating agency Standard & Poor’s stripped the United States of its prime AAA rating.
Treasury Secretary Janet Yellen said Fitch’s move was based on outdated data, noting that the US economy had recovered quickly from the pandemic recession.
“There was some negativity in Asian equity markets mid-week on Fitch’s downgrade news. The news that Fitch downgraded the US credit rating by one notch, while not a turning point, was enough to put risk appetite on the back burner, as evidenced by the red across the board,” said Tim Waterer, chief markets analyst at KCM Trade.
While Inflation has gone down With the US economy remaining remarkably resilient since the summer, critics say there is no guarantee inflation will continue to cool at the same pace.
Markets are also absorbing the latest corporate earnings reports. Shares of dating app Match rose after it beat analysts’ revenue and earnings forecasts on a strong quarter for Tinder.
CVS shares are up nearly 2% premarket after the retail pharmacy chain beat expectations despite falling profits. Starbucks slipped 1.6% after missing sales targets.
Apple and Amazon report on Thursday.
In Europe, Britain’s FTSE 100 was down 1% at midday, Germany’s DAX was down 0.8% and France’s CAC 40 was down 0.5%.
Japan’s benchmark Nikkei 225 fell 2.3% to close at 32,707.69. Australia’s S&P/ASX 200 fell 1.3% to 7,354.60. South Korea’s kospi fell 1.9% to 2,616.47. Hong Kong’s Hang Seng fell 2.5% to 19,517.38, while the Shanghai Composite fell 0.9% to 3,261.69.
In energy trading, the reference price for US crude rose 55 cents to $81.92 a barrel. Brent crude, the international standard, rose 49 cents to $85.40 a barrel.
In forex trading, the US dollar fell to 142.82 Japanese yen from 142.83 yen. The euro was unchanged at $1.0982.
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Kageyama reported from Tokyo; Ott reported from Washington.
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