Stocks moved sharply lower early in the session on Wednesday and continue to see significant weakness in afternoon trading. The major averages have all moved to the downside, with the tech-heavy Nasdaq leading the way.
The major averages have climbed off their worst levels of the day but remain firmly negative. The Nasdaq is down 294.96 points or 2.1 percent at 13,988.96, the S&P 500 is down 55.64 points or 1.2 percent at 4,521.09 and the Dow is down 275.87 points or 0.8 percent at 35,354.81.
The sell-off 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drew a strong response from the U.S., with Treasury Secretary Janet Yellen calling the change “arbitrary and based on outdated data.”
In U.S. economic news, payroll processor ADP released a report 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.
Sector News
Semiconductor stocks continue to see substantial weakness on the day, resulting in a 3.4 percent nosedive by the Philadelphia Semiconductor Index.
Chipmaker Advanced Micro Devices (AMD) has moved sharply lower after reporting better than expected second quarter results but providing disappointing sales guidance for the current quarter.
Significant weakness also remains visible among software stocks, as reflected by the 2.8 percent slump by the Dow Jones U.S. Software Index.
Gold stocks also continue to see considerable weakness, dragging the Arca Gold Bugs Index down by 2.2 percent. The weakness in the gold sector comes amid a modest decrease by the price of the precious metal.
Steel, energy and banking stocks are also showing notable moves to the downside, moving lower along with most of the other major sectors.
Other Markets
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 also showed significant moves to the downside on the day. While the French CAC 40 Index tumbled by 1.3 percent, the German DAX Index and the U.K.’s FTSE 100 Index both dove by 1.4 percent.
In the bond market, treasuries have climbed well off their lows of the session but remain in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 4.080 percent.
U.S. Stocks Remain Sharply Lower After Early Sell-Off
2023-08-02 17:18:24
