Stock market today: Wall Street opens lower as this year’s rally cools some more

Aug 2, 2023, 10:54 PM

NEW YORK (AP) — Stocks are falling again as Wall Street’s red-hot rally this year cools a bit more. The S&P 500 fell 0.5% early Thursday, on pace for a third straight loss after hitting a 16-month high. The Dow fell 118 points, or 0.3%, and the Nasdaq composite was down 0.5%. Treasury yields in the bond market continued to march higher, putting more pressure on the stock market. Yields have climbed as the economy has remained remarkably resilient despite much higher interest rates meant to drive down inflation. A report on Thursday about unemployment claims indicated the job market is still solid.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

BEIJING (AP) — Global stock markets and Wall Street futures declined Thursday after Fitch Ratings cut the U.S. government’s credit rating.

London and Paris opened lower. Tokyo lost 1.7% and Hong Kong also declined. Shanghai advanced. Oil prices retreated.

Wall Street turned in its biggest one-day decline in months Wednesday after Fitch Ratings lowered the U.S. government credit rating by one level. The agency cited rising debt and a “steady deterioration in standards of governance” after Congress pushed Washington close to defaulting before agreeing to raise the amount it can borrow.

“This is largely irrelevant despite some initial shock,” Kristina Hooper, chief global market strategist at investment management company Invesco, said in a report, noting that this makes the U.S. rating more consistent with other major economies. “The timing was odd, given that it occurred well after the debt ceiling issue was resolved.”

In early trading, the FTSE 100 in London lost 1.3% to 7,466.49. The CAC 40 in Paris retreated 0.9% to 7,246.21, and the DAX in Frankfurt gave up 0.8% to 15,883.21.

On Wall Street, the future for the benchmark S&P 500 index was 0.3% lower. For the Dow Jones Industrial Average, it declined 0.2%.

The S&P 500 sank 1.4% on Wednesday after Fitch cut the U.S. government debt rating from the highest level of AAA to AA+. It was the second-straight loss for the market benchmark after last week’s 16-month high.

The Dow dropped 1%, and the Nasdaq composite fell 2.2%.

In Asia, the Nikkei 225 in Tokyo tumbled to 32,159.28 and the Hang Seng in Hong Kong lost 0.5% to 19,420.87. The Shanghai Composite Index rose 0.6% to 3,280.46.

The Kospi in Seoul gave up 0.4% to 2,605.39, and Sydney’s S&P-ASX 200 declined 0.6% to 7,311.70.

India’s Sensex lost 1% to 65,116.42. Jakarta gained while New Zealand and other Southeast Asian markets declined.

The Fitch downgrade strikes at the core of the global financial system because U.S. Treasuries are considered some of the safest possible investments. The agency cited repeated standoffs in Congress about whether to cause the government to default, among other factors.

Standard & Poor’s stripped the U.S. of its AAA rating in 2011 after a fight over the government’s borrowing limit. The Government Accountability Office later estimated that budget standoff raised borrowing costs by $1.3 billion that year.

Investors are watching whether the U.S. economy can avoid a recession that was widely expected following repeated interest rate hikes to cool inflation.

Traders have been more optimistic lately, helping to push up the S&P 500 by 19.5% for the first seven months of this year.

A report Wednesday by payroll processor ADP suggested hiring in the private sector is stronger than expected, even if it slowed in July from the previous month. Strong hiring could help to dampen fears of a recession but also might persuade the Federal Reserve there is too much upward pressure on prices.

The U.S. government is due to issue more comprehensive jobs data Friday. Fed Chair Jerome Powell has pointed to Friday’s numbers as a big influence on the central bank’s next move in September.

On Wall Street, Microsoft, Nvidia and Amazon each fell more than 2.5% on Wednesday.

Generac Holdings, which sells generators and other power products, tumbled 24.4% for the biggest drop in the S&P 500 after it reported weaker profit than analysts expected.

SolarEdge Technologies dropped 18.4% after reporting weaker profit and revenue growth than forecast. It said higher interest rates were pressuring U.S. residential customers.

Other companies have been beating profit expectations.

CVS Health rose 3.3% after it reported a milder drop in results than expected. Humana climbed 5.6% after it topped expectations.

In energy markets, benchmark U.S. crude lost 43 cents to $79.06 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.88 the previous day to $79.49. Brent crude, the price basis for international oil trading, gave up 54 cents to $82.66 per barrel in London. It lost $1.71 the previous session to $83.20.

The dollar rose to 142.89 yen from Wednesday’s 143.28 yen. The euro declined to $1.0927 from $1.0943.

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Stock market today: Wall Street opens lower as this year’s rally cools some more