US stocks fall after Fitch downgrade, S&P 500 down 1.4%
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Traders work on the floor of the New York Stock Exchange, in New York City.
PHOTO: AFP
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NEW YORK - Wall Street stocks dropped on Wednesday, joining a sea of red on global equity bourses after Fitch stripped the United States of its highest credit rating.
The Dow Jones Industrial Average shed almost 350 points, or 1 per cent, to finish at 35,282.52.
The broad-based S&P 500 dropped 1.4 per cent to 4,513.39, while the tech-rich Nasdaq Composite Index tumbled 2.2 per cent to 13,973.45.
Fitch Ratings downgraded the United States from AAA to AA+ on Tuesday, citing a growing federal debt burden and an “erosion of governance” that has manifested in debt limit standoffs.
It is the second time a major ratings agency lowered the country’s rating, after S&P made a similar move in 2011.
LPL’s Quincy Krosby called the downgrade a “rationale for the market to sell off,” adding that “the market was due for a pullback” after continuing its 2023 rally in July.
Elsewhere, payroll firm ADP said the US private sector added 324,000 jobs last month.
This was down from a revised 455,000 figure in June but well above analysts’ consensus estimate of 185,000.
The report comes two days ahead of US government jobs data, which is closely watched for its potential bearing on central bank rate decisions moving forward.
Among individual companies, CVS Health shares jumped 3.3 per cent following a mixed earnings report in which it topped analyst estimates but lowered its full-year forecast.
Advanced Micro Devices sank 7 per cent after reporting a 94 per cent drop in quarterly profits to US$27 million (S$36 million). Analysts described the chip company’s report and forecast as lacklustre. AFP
