Wall Street fell on Wednesday after rating agency Fitch’s downgraded the U.S. government’s credit rating to AA+ from AAA, citing fiscal deterioration over the next three years as well as growing government debt, the second major agency to cut the country’s rating after Standard & Poor’s stripped the U.S. government of its triple-A grade in 2011.
The Fitch downgrade has provided investors a reason to book profits, said Sam Stovall, chief investment strategist at CFRA Research. “We have seen the markets advanced quite nicely in July and now the downgrade dampens near-term investor sentiment.”
The benchmark S&P 500 and the tech-heavy Nasdaq took a breather in the previous session as investors entered a seasonally slow August after ending July strong on the back of better-than-expected earnings and hopes of a soft landing for the U.S. economy.
Rate-sensitive megacap stocks including Tesla, Nvidia, Meta Platforms, and Apple tumbled, as yield on U.S. 10-year Treasury notes rose to its highest in nearly nine months at 4.1%… Declining issues outnumbered advancers by a 5.34-to-1 ratio on the NYSE and a 3.31-to-1 ratio on the Nasdaq.
MacDailyNews Take: As Wendell Phillips said, “Debt is the fatal disease of republics, the first thing and the mightiest to undermine governments and corrupt the people.”
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