Stocks fell on Wednesday after Fitch downgraded the US’s long-term rating and Wall Street weighed the consequences. Traders also looked at the latest batch of second quarter earnings results.
He Dow Jones Industrial Average it slid 214 points, or 0.6%. He S&P 500 fell by 0.9%, and the Nasdaq Composite shed 1.6%.
Fitch Ratings lower the long-term foreign currency issuer default rating for USA to AA+ from AAA Tuesday night, citing “expected fiscal deterioration in the next three years.”
“Investors may use this Fitch downgrade as a reason to take some gains, but we think it was probably a natural part of the market cycle anyway, after such a strong run, very little volatility,” said Mona Mahajan, strategist investment senior at Eduardo Jones. “Broadly speaking, this has not deterred our fundamental view of the economy or markets.”
The economic outlook continues to show signs of resiliency and conditions look very different from the last time US credit was downgraded in 2011, he added.
Technology stocks lagged in morning trading, leading lower by Chinese tech stocks. jd.com, Ali Baba and Baidu all fell more than 2% as China proposed smartphone limits use for minors.
On top of that, a busy week of earnings continued. advanced micro devices it was flat despite better than expected results. CVS Health increased 2% after publication strong earnings because it cuts costs. SolarEdge Technologies fell 16% after Missing the second quarter income expectations.
Earnings season is more than halfway over and the results are better than expected. Of the S&P 500 companies that have reported, about 82% have posted positive surprises, according to FactSet data. Earnings beats have added to investor bullish sentiment, continuing this year’s rally.
“A soft landing is fast becoming consensus and stocks may take a breather after a strong rally,” said Emmanuel Cau, head of European equity strategy at Barclays. “But absent a negative catalyst to upset the Goldilocks narrative, we think the bullish rut can continue.”
— CNBC’s Darla Mercado contributed to this report.
Discover more from PressNewsAgency
Subscribe to get the latest posts sent to your email.