U.S. Stocks May See Further Downside In Early Trading

Following the sell-off seen in the previous session, stocks may see further downside in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

Concerns about U.S. debt may continue to weigh on Wall Street 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.

A steep drop by shares of Qualcomm (QCOM) may lead to an extended slump by the tech-heavy Nasdaq, with the chipmaker plunging by 9.8 percent in pre-market trading.

Qualcomm is under pressure after reporting better than expected second quarter earnings but weaker than expected revenues. The company also provided disappointing guidance.

On the U.S. economic front, a report released by the Labor Department showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended July 29th.

The Labor Department said initial jobless claims crept up to 227,000, an increase of 6,000 from the previous week’s unrevised level of 221,000. The uptick in jobless claims matched economist estimates.

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of July.

The ISM’s services PMI is expected to edge down to 53.0 in July from 53.9 in June, although a reading above 50 would still indicate growth.

The Commerce Department is also due to release its report on new orders for manufactured goods in the month of June. Factory orders are expected to jump by 2.2 percent in June after rising by 0.3 percent in May.

After ending Tuesday’s session modestly lower, stocks showed a more substantial move to the downside during trading on Wednesday. The tech-heavy Nasdaq led the sell-off, while the Dow pulled back off its best closing level in well over a year.

The major averages climbed off their worst levels going into the close but remained sharply lower. The Nasdaq plunged 310.47 points or 2.2 percent to 13,973.45, the S&P 500 tumbled 63.34 points or 1.4 percent to 4,513.39 and the Dow slumped 348.16 points or 1.0 percent to 35,282.52.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 1.7 percent, while Hong Kong’s Hang Seng Index fell by 0.5 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index has slumped by 1.0 percent, the U.K.’s FTSE 100 Index is down by 0.9 percent and the French CAC 40 Index is down by 0.8 percent.

In commodities trading, crude oil futures are rising $0.21 to $79.68 a barrel after plunging $1.88 to $79.49 a barrel on Wednesday. Meanwhile, after slipping $3.80 to $1,975 an ounce in the previous session, gold futures are falling $8 to $1,967 an ounce.

On the currency front, the U.S. dollar is trading at 142.54 yen versus the 143.32 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0953 compared to yesterday’s $1.0938.