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US Stock Market Faces Dip After Fitch Downgrades Credit Rating

Amid an unexpected credit rating downgrade by Fitch, the U.S. stock market is witnessing a drop this Wednesday.

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Wall Street sign

U.S. Stock Market Falls After Fitch Credit Rating Downgrade

U.S. stocks were on a downward trend this Wednesday, largely influenced by Fitch's surprise credit rating downgrade. As of 9:49 ET (13:49 GMT), the Dow Jones Industrial Average was down by 137 points or 0.4%, with the S&P 500 down by 0.8%, and the NASDAQ Composite decreased by 1.3%.

Fitch Lowers US Government’s Credit Rating

Market sentiment took a blow when Fitch decreased the U.S. government's credit rating from AAA to AA+ late Tuesday. Citing likely fiscal decay over the upcoming three years and recurrent tense debt ceiling negotiations, Fitch joined Standard & Poor's in taking away the U.S.'s triple-A rating - a move first done by S&P in 2011. The U.S. government swiftly responded, with Treasury Secretary Janet Yellen calling the decision "arbitrary and based on outdated data."

Corporate Earnings Season Marches On Despite Market Drop

Despite the initial losses, the quarterly corporate earnings season continues. Approximately 82% of the S&P 500 companies have reported positive surprises this reporting season, based on data from FactSet. CVS Health (NYSE: CVS) witnessed a 3% rise following strong earnings and revenue reports for Q2. On the other hand, shares of Norwegian Cruise Line Holdings Ltd (NYSE: NCLH) and Advanced Micro Devices Inc (NASDAQ: AMD) decreased by 3.4% and 3% respectively, after the former revealed weaker-than-expected guidance for Q3, and the latter announced better-than-expected results.

Outlook for Upcoming Company Reports and Labor Data

The close of the market will see reports from chipmaker Qualcomm (NASDAQ: QCOM) and web platform Shopify (NYSE: SHOP). Starbucks' (NASDAQ: SBUX) stock made a 1.3% recovery even after its global comparable sales fell short of estimates. Upcoming is the release of July's ADP jobs report, which unexpectedly reported 324,000 new positions in July against an expected 189,000. The government's comprehensive report on July labor trends is scheduled for release on Friday.

Oil Prices Fluctuate Following U.S. Inventory Decline

Oil prices experienced volatility following data revealing a significant drop in U.S. inventories, suggesting strong demand from the world's largest fuel consumer. American Petroleum Institute data released on Tuesday showed U.S. crude inventories decreasing by 15.4 million barrels in the week to July 28, marking the largest drop since 1982. WTI was down 0.7% to $80.88 a barrel, Brent crude fell 0.5% to $84.50 a barrel, while Gold remained stable at $1,980.