Dow futures retreat after Fitch downgrade; ADP jobs data due
Investing.com — U.S. stock futures fell Wednesday after the surprise downgrading of the country’s top-tier credit rating by Fitch, while the quarterly corporate earnings season continues.
By 06:30 ET (10:30 GMT), the Dow Futures contract was down 175 points, or 0.5%, S&P 500 Futures traded 32 points, or 0.7%, lower and Nasdaq 100 Futures dropped 160 points, or 1%.
Risk sentiment took a hit after Fitch downgraded the U.S. government’s credit rating to AA+ from AAA late Tuesday, citing likely fiscal deterioration over the next three years and repeated fraught debt ceiling negotiations.
Fitch became the second major rating agency after Standard & Poor’s move to strip the United States of its triple-A rating in 2011, but this decision brought a sharp response from the U.S. government, with Treasury Secretary Janet Yellen calling it «arbitrary and based on outdated data.»
After the initial losses, “markets will likely see it in a similar way (i.e. strictly tied to the debt ceiling standoff) especially in a week full of important data releases and with the next Federal Reserve rate hike hanging in the balance,” said analysts at ING, in a note.
The main Wall Street indices suffered a lackluster start to the new month, with the blue chip Dow Jones Industrial Average gaining 70 points, or 0.2%, on Tuesday, while the broad-based S&P 500 fell 0.3% and the tech-heavy Nasdaq Composite dropped 0.4%.
However, strong earnings have largely helped stocks this reporting season, with around 82% of the S&P 500 companies that have reported posting positive surprises, according to FactSet data.
Pharmacy chain and health provider CVS Health (NYSE:CVS), fast food corporation Yum! Brands (NYSE:YUM) and health insurer Humana (NYSE:HUM) are set to
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