US Shares Undergo Worst Losses in Six Months Following Fitch’s Credit score Ranking Downgrade

https://sputnikglobe.com/20230802/us-stocks-suffer-worst-losses-in-six-months-following-fitchs-credit-rating-downgrade-1112356934.html

US Shares Undergo Worst Losses in Six Months Following Fitch’s Credit score Ranking Downgrade

US Shares Undergo Worst Losses in Six Months Following Fitch’s Credit score Ranking Downgrade

US shares posted large losses on Wednesday, with the Nasdaq struggling its worst loss in six months.

2023-08-02T21:11+0000

2023-08-02T21:11+0000

2023-08-02T21:11+0000

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US shares posted large losses on Wednesday, with the Nasdaq struggling its worst loss in six months after shedding 2.17% of its worth, or 310.47 factors, closing at 13,973.45. Different indices suffered as effectively, with the Dow Jones Industrial Common shedding 348.16 factors, or 0.98% of its worth, to shut at 35,282.52. The S&P 500 misplaced 1.38% of its worth, dropping by 63.34 factors to shut at 4,513.39.A day prior, Fitch Scores introduced it was downgrading the US federal authorities’s credit standing from AAA to AA+, the second time it has executed so and for a similar cause as the primary: shaken confidence within the US authorities to correctly deal with its money owed.The choice got here after congressional Republicans stonewalled elevating the debt ceiling for months, utilizing the specter of a authorities default to strain Democrats into agreeing to stiff funds cuts. A deal was lastly reached in early June, probably simply days earlier than the Treasury predicted a default would possibly happen. The final time the US’ credit standing was downgraded was in 2011, following an almost similar showdown.Jamie Dimon, the CEO of JPMorgan Chase, the world’s largest financial institution by capitalization, instructed US media on Wednesday that the downgrading “doesn’t actually matter that a lot,” however nonetheless known as it “ridiculous” that different nations that depend upon the US, corresponding to Canada, have the next credit standing than Washington.The downgrade additionally helped push the yield on the 10-year US Treasury bond to its highest level since final October and likewise edged the yield on the 2-year Treasury bond up increased as effectively. The 2 stay in what economists time period an “inverted yield curve,” which means the longer-term bonds are price lower than the quick time period – a telltale indicator that buyers anticipate a recession within the coming months.In response to information stories, the bond markets have been additionally responding to information that the US Treasury could be promoting off one other $103 billion price of securities subsequent week, together with 3-year, 10-year, and 30-year money owed.A lot of different elements additionally contributed to the losses on Wednesday, together with tech shares that suffered following information that China would restrict day by day smartphone use for minors.

https://sputnikglobe.com/20230727/us-headed-toward-hard-recession-as-fed-implements-highest-rate-hike-in-22-years-1112170288.html

https://sputnikglobe.com/20230802/what-are-fitch-ratings-and-what-does-uss-downgrade-mean-for-other-nations-1112344239.html

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nasdaq composite; us shares; treasury bonds; credit standing

nasdaq composite; us shares; treasury bonds; credit standing

On Tuesday, worldwide credit standing agency Fitch downgraded the US authorities’s credit standing, citing fiscal instability within the wake of one other latest funds showdown that risked a federal authorities default.

US shares posted large losses on Wednesday, with the Nasdaq struggling its worst loss in six months after shedding 2.17% of its worth, or 310.47 factors, closing at 13,973.45.

Different indices suffered as effectively, with the Dow Jones Industrial Common shedding 348.16 factors, or 0.98% of its worth, to shut at 35,282.52. The S&P 500 misplaced 1.38% of its worth, dropping by 63.34 factors to shut at 4,513.39.

A day prior, Fitch Scores introduced it was downgrading the US federal authorities’s credit standing from AAA to AA+, the second time it has executed so and for a similar cause as the primary: shaken confidence within the US authorities to correctly deal with its money owed.

“The score downgrade of the US displays the anticipated fiscal deterioration over the following three years, a excessive and rising normal authorities debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated friends during the last 20 years that has manifested in repeated debt restrict standoffs and last-minute resolutions,” Fitch stated.

In this Nov. 23, 2020, photo, a street sign is displayed at the New York Stock Exchange in New York. S&P DJ Indices is removing 21 Chinese companies from its indexes, or groups of stocks and bonds used to track financial market movements, after Americans were barred from investing in them as part of a feud with Beijing over technology and security. - Sputnik International, 1920, 27.07.2023

US Headed Towards ‘Exhausting Recession’ as Fed Implements Highest Fee Hike in 22 Years

The choice got here after congressional Republicans stonewalled elevating the debt ceiling for months, utilizing the specter of a authorities default to strain Democrats into agreeing to stiff funds cuts. A deal was lastly reached in early June, probably simply days earlier than the Treasury predicted a default would possibly happen. The final time the US’ credit standing was downgraded was in 2011, following an almost similar showdown.

“Buyers might use this Fitch downgrade as a cause to take some income, however we expect that was in all probability a pure a part of the market cycle anyway, after such a robust run, little or no volatility,” Mona Mahajan, senior funding strategist at Edward Jones, instructed US media. “Broadly talking, this hasn’t deterred our elementary view of the economic system or markets.”

Jamie Dimon, the CEO of JPMorgan Chase, the world’s largest financial institution by capitalization, instructed US media on Wednesday that the downgrading “doesn’t actually matter that a lot,” however nonetheless known as it “ridiculous” that different nations that depend upon the US, corresponding to Canada, have the next credit standing than Washington.

“To have them be triple-A and never America is type of ridiculous,” Dimon stated. “It’s nonetheless essentially the most affluent nation on the planet, it’s essentially the most safe nation on the planet.”

Fitch Ratings - Sputnik International, 1920, 02.08.2023

What are Fitch Scores and What Does US’ Downgrade Imply for Different Nations?
The downgrade additionally helped push the yield on the 10-year US Treasury bond to its highest level since final October and likewise edged the yield on the 2-year Treasury bond up increased as effectively. The 2 stay in what economists time period an “inverted yield curve,” which means the longer-term bonds are price lower than the quick time period – a telltale indicator that buyers anticipate a recession within the coming months.

In response to information stories, the bond markets have been additionally responding to information that the US Treasury could be promoting off one other $103 billion price of securities subsequent week, together with 3-year, 10-year, and 30-year money owed.

A lot of different elements additionally contributed to the losses on Wednesday, together with tech shares that suffered following information that China would restrict day by day smartphone use for minors.


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