After ending the previous session modestly lower, stocks may see further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.6 percent.
The downward momentum on Wall Street comes after credit rating agency Fitch Ratings unexpectedly downgraded the United States’ credit rating.
Fitch downgraded the U.S.’ long-term foreign-currency issuer default rating to AA+ from AAA, citing a “steady deterioration in standards of governance over the last 20 years.”
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said.
The move drew a strong response from the U.S., with Treasury Secretary Janet Yellen calling the change “arbitrary and based on outdated data.”
The futures remained in the red following the release of a report from payroll processor ADP showing U.S. private sector employment jumped by much more than expected in the month of July.
ADP said private sector employment shot up by 324,000 jobs in July after surging by a downwardly revised 455,000 jobs in June.
Economists had expected private sector employment to increase by 189,000 jobs compared to the spike of 497,000 jobs originally reported for the previous month.
“The economy is doing better than expected and a healthy labor market continues to support household spending,” said ADP chief economist Nela Richardson. “We continue to see a slowdown in pay growth without broad-based job loss.”
While the report points to continued strength in the U.S. labor market, the data may lead to renewed concerns about the outlook for interest rates.
On Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of July.
Economists currently employment to increase by 200,000 jobs in July after climbing by 209,000 jobs in June, while the unemployment rate is expected to remain at 3.6 percent.
Following a strong July, U.S. stocks saw modest weakness to kick off the month of August on Tuesday. The Nasdaq and S&P 500 moved to the downside, although the narrower Dow managed to finish the day in positive territory.
The Nasdaq slid 62.11 points or 0.4 percent to 14,283.91 and the S&P 500 fell 12.23 points or 0.3 percent to 4,576.73, but the Dow rose 71.15 points or 0.2 percent to 35,630.68, its best closing level in well over a year.
In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan’s Nikkei 225 Index plunged by 2.3 percent, while China’s Shanghai Composite Index slumped by 0.9 percent.
The major European markets have also moved to the downside on the day. While the French CAC 40 Index has slid by 0.6 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 0.9 percent.
In commodities trading, crude oil futures are climbing $0.61 to $81.98 a barrel after falling $0.43 to $81.37 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,983.70, up $4.90 compared to the previous session’s close of $1,978.80. On Tuesday, gold plunged $30.40.
On the currency front, the U.S. dollar is trading at 143.08 yen compared to the 143.34 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0961 compared to yesterday’s $1.0984.
Business News
U.S. Stocks Likely To See Initial Weakness Following Fitch Downgrade
2023-08-02 12:47:42
