US stock market: Wall Street ends down, investors step back after Fitch US rating cut
Nasdaq Composite down for a second straight day as investors took profits on five months of gains a day after rating agency Fitch cut the U.S. government's credit rating. Fitch downgraded the United States to AA+ from AAA late on Tuesday, citing expected fiscal deterioration over the next three years as well as growing government debt.
Fitch was the second major agency to cut the country's rating. In 2011 Standard & Poor's stripped the country of its triple-A grade. Reaction to the news pushed major indexes lower, with the S&P 500 recording its biggest daily percentage drop since April 25.
It was also the first session since May 23 in which the benchmark declined by more than 1%. Still, several major brokerages said the downgrade was unlikely to result in a sustained drag on U.S. financial markets, noting the economy was now stronger than it was when S&P cut its rating in 2011.
July was the fifth straight month of gains for the S&P 500 and the tech-heavy Nasdaq Composite, driven by better-than-expected earnings and hopes of a soft landing for the U.S. economy. However, with markets entering a seasonally slow August, the Fitch downgrade offered an opportunity for investors to take a breather.
«Sometimes it's healthy to have this digestion in the market, as it brings down valuations a bit and it allows for dip-buying,» said Quincy Krosby, chief global strategist for LPL Financial in Charlotte, North Carolina. Rate-sensitive megacap stocks, including Tesla, Nvidia, Meta Platforms and Apple, tumbled, as the yield on U.S. 10-year Treasury notes rose to its highest in nearly nine months.
Read more on economictimes.indiatimes.com
