US Credit Rating Downgrade by Fitch: On Wednesday, Fitch cut the US government’s credit rating, sending Wall Street futures plummeting and global investors anxious.
Because the economy was worsening and the government’s debt would remain rising over the next three years, Fitch downgraded the US from AAA to AA+. This is like Standard & Poor’s 2011 downgrading, which cost the country its triple-A rating. Even while the dollar index rose, purchasers sought protection in gold and the Japanese yen as the yield on 10-year U.S. Treasury notes plummeted to 4.02%.
Despite being rated AA+ twice, some market analysts suggest the downgrading may not affect the market. UBS Global Wealth Management’s head of investments, Mark Haefele, believes the latest downgrading doesn’t reveal anything new about the economy.
The Dow, S&P 500, and Nasdaq 100 e-minis were down 104, 24, and 132.25 points in premarket trade. Tesla, Nvidia, Meta Platforms, and Microsoft all fell 0.82.5 percentage points.
AMD defied the trend. Its stock price rose 1.6% because the company is optimistic about the remainder of the year and aims to deliver artificial intelligence chips to compete with Nvidia.
Refinitiv data shows that the prior estimate of a 7.9% reduction in U.S. second-quarter profitability is better than the current forecast of 5.9%. The S&P 500 and Nasdaq rested in the last session. August is slow. Caterpillar’s quarterly profits boosted the Dow.
Because it missed quarterly comparable sales projections, Starbucks, the world’s largest coffee company, saw its sales decline 1.9%. After reporting a quarterly profit over Wall Street expectations, CVS Health Corp.’s share price rose 1.4%. Due to better-than-expected second-quarter results, DuPont de Nemours stock rose 0.3%. The company sold lots to aerospace, automotive, and healthcare.
Wells Fargo’s shares dipped 1% after the company said it would pay up to $1.8 billion to replenish a government deposit insurance fund that lost $16 billion this year when three banks failed. The fund lost $16 billion after three banks failed this year.
Investors await the July ADP National Employment Report for local labor market data. This report will be released on Thursday, one day before the much-anticipated non-farm payroll data.
Our Reader’s Queries
What are the Fitch downgrades for USA rating?
Registered already? Fitch lowered the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on 1 August 2023.
How many times has US credit been downgraded?
Fitch Ratings dropped the US long-term credit ratings from AAA to AA+ on August 1, 2023. However, they kept the country credit ceiling at AAA, allowing other borrowers in the US to still receive AAA ratings.
Did the US get a credit downgrade?
In August, Fitch Rating lowered the government’s long-term credit rating from AAA to AA+.
Why the US credit rating was cut by Fitch and what it means?
Fitch downgraded the US due to an “erosion of governance” resulting in repeated debt limit standoffs and last-minute resolutions. This led to a one-step downgrade to a rating of AA+. Every few years, the US faces the prospect of a debt default due to its own policy, according to Fitch’s assessment.