Stock market today: Wall Street points lower after Fitch downgrades U.S. government’s credit rating

TOKYO –

Wall Street was poised to open lower Wednesday after the United States government’s credit rating was cut for just the second time in history.

Futures for the Dow Jones industrials slipped 0.3 per cent before the bell and futures for the S&P 500 tumbled 0.5 per cent.

Investor optimism was hurt by Fitch Ratings downgrading the U.S. government’s credit rating, citing rising debt at the federal, state, and local levels. The rating was cut Tuesday one notch to AA+ from AAA, the highest possible rating. In 2011, the ratings agency Standard & Poor’s stripped the U.S. of its prize AAA rating.

Treasury Secretary Janet Yellen said the move by Fitch was based on outdated data, noting the U.S. economy has rapidly recovered from the pandemic recession.

“Some negativity was permeating across Asian equity markets mid-week thanks to Fitch downgrade news. While not a game-changer, news that Fitch downgraded the U.S. credit rating by a notch was enough to put risk appetite on the back foot, as evidenced by the red numbers across the board,” said Tim Waterer, chief market analyst at KCM Trade.

While inflation has come down since the summer and the U.S. economy has remained remarkably resilient, critics say it’s no guarantee inflation will continue to cool at the same rate.

Markets are also absorbing the latest corporate earnings reports. Shares of the dating app Match rose after it beat analysts’ sales and profit forecasts on a strong quarter from Tinder.

CVS shares rose nearly two per cent in premarket after the retail pharmacy chain beat expectations, even as profits sank. Starbucks dipped 1.6 per cent after it missed sales targets.

Apple and Amazon report Thursday.

In Europe at midday, Britain’s FTSE 100 dropped one per cent, Germany’s DAX slid 0.8 per cent and France’s CAC 40 fell 0.5 per cent.

Japan’s benchmark Nikkei 225 dove 2.3 per cent to finish at 32,707.69. Australia’s S&P/ASX 200 fell 1.3 per cent to 7,354.60. South Korea’s Kospi slid 1.9 per cent to 2,616.47. Hong Kong’s Hang Seng dipped 2.5 per cent to 19,517.38, while the Shanghai Composite lost 0.9 per cent to 3,261.69.

In energy trading, benchmark U.S. crude rose 55 cents to $81.92 a barrel. Brent crude, the international standard, gained 49 cents to $85.40 a barrel.

In currency trading, the U.S. dollar edged down to 142.82 Japanese yen from 142.83 yen. The euro was unchanged at $1.0982.

——

Kageyama reported from Tokyo; Ott reported from Washington.