Stocks are falling, as Wall Street loses some more momentum following its torrid run so far this year. The S&P 500 was 0.7% lower Wednesday, on track for a second straight losing day after hitting a 16-month high. The Dow was down 125 points, or 0.4%, and the Nasdaq composite was 1.1% lower shortly after the open of trading. Yields were mixed in the bond market after Fitch Ratings cut the credit rating of the U.S. government. The downgrade strikes at the core 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 BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street was poised to open lower Wednesday after the United States government’s credit rating was cut for just the second time in history.
Futures for the Dow Jones industrials slipped 0.3% before the bell and futures for the S&P 500 tumbled 0.5%.
Investor optimism was hurt by Fitch Ratings downgrading the U.S. government’s credit rating, citing rising debt at the federal, state, and local levels. The rating was cut Tuesday one notch to AA+ from AAA, the highest possible rating. In 2011, the ratings agency Standard & Poor’s stripped the U.S. of its prize AAA rating.
Treasury Secretary Janet Yellen said the move by Fitch was based on outdated data, noting the U.S. economy has rapidly recovered from the pandemic recession.
“Some negativity was permeating across Asian equity markets mid-week thanks to Fitch downgrade news. While not a game-changer, news that Fitch downgraded the U.S. credit rating by a notch was enough to put risk appetite on the back foot, as evidenced by the red numbers across the board,” said Tim Waterer, chief market analyst at KCM Trade.
While inflation has come down since the summer and the U.S. economy has remained remarkably resilient, critics say it’s no guarantee inflation will continue to cool at the same rate.
Markets are also absorbing the latest corporate earnings reports. Shares of the dating app Match rose after it beat analysts’ sales and profit forecasts on a strong quarter from Tinder.
CVS shares rose nearly 2% in premarket after the retail pharmacy chain beat expectations, even as profits sank. Starbucks dipped 1.6% after it missed sales targets.
Apple and Amazon report Thursday.
In Europe at midday, Britain’s FTSE 100 dropped 1%, Germany’s DAX slid 0.8% and France’s CAC 40 fell 0.5%.
Japan’s benchmark Nikkei 225 dove 2.3% to finish at 32,707.69. Australia’s S&P/ASX 200 fell 1.3% to 7,354.60. South Korea’s Kospi slid 1.9% to 2,616.47. Hong Kong’s Hang Seng dipped 2.5% to 19,517.38, while the Shanghai Composite lost 0.9% to 3,261.69.
In energy trading, benchmark U.S. crude rose 55 cents to $81.92 a barrel. Brent crude, the international standard, gained 49 cents to $85.40 a barrel.
In currency trading, the U.S. dollar edged down to 142.82 Japanese yen from 142.83 yen. The euro was unchanged at $1.0982.
Kageyama reported from Tokyo; Ott reported from Washington.
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