Wall St futures tumble after Fitch downgrades top-tier US rating

Wall Street futures tumbled on Wednesday after rating agency Fitch's move to downgrade the US government's credit rating hit appetite for risky assets around the world, reports Reuters.
Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years as well as a growing general government debt burden, making it the second major rating agency after Standard & Poor's move in 2011 to strip the country of its triple-A rating.
The yield on US 10-year Treasury notes slipped to 4.02 per cent. Safe havens gold and the Japanese yen rose, while the dollar index edged higher.
"Though the US now holds two AA+ ratings, we think the latest downgrade does not reflect any new fiscal information and should only have a limited market impact," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
Chart shows that the US's long-term foreign currency rating was downgraded by Fitch to AA+ in 2023, following a similar move from S&P in 2011.
Chart shows that the US's long-term foreign currency rating was downgraded by Fitch to AA+ in 2023, following a similar move from S&P in 2011.
At 06:55 a.m. ET, Dow e-minis were down 104 points, or 0.29 per cent, S&P 500 e-minis were down 24 points, or 0.52 per cent, and Nasdaq 100 e-minis were down 132.25 points, or 0.84 per cent.
Megacap stocks including Tesla, Nvidia, Meta Platforms and Microsoft fell between 0.8 per cent and 2.5 per cent in premarket trading.
Beating the trend, Advanced Micro Devices rose 1.6 per cent after forecasting an upbeat finish to the year and on plans to launch AI chips that could compete with market leader Nvidia.
US second-quarter earnings are now expected to fall 5.9 per cent from a year earlier, as per Refinitiv data, compared with a 7.9 per cent decline estimated a week earlier.
The benchmark S&P 500 and tech-heavy Nasdaq took a breather in the previous session as investors entered a seasonally slow August. The blue-chip loaded Dow ended higher, underpinned by gains in Caterpillar after the global economic bellwether posted upbeat quarterly profits.
Among other early movers, Starbucks eased 1.9 per cent after the world's largest coffeehouse chain missed market expectations for quarterly comparable sales.
CVS Health Corp gained 1.4 per cent on beating Wall Street estimates for quarterly profit, boosted by strength in its pharmacy benefit management unit and lower-than-expected medical costs in its health insurance business.
DuPont de Nemours added 0.3 per cent on beating estimates for second-quarter profit, benefiting from strong demand for materials used in aerospace, automotive and healthcare industries.
Wells Fargo said it expects to pay as much as $1.8 billion to help replenish a government deposit insurance fund that was drained of $16 billion this year after three banks collapsed, sending its shares 1 per cent lower.
Investors also await the ADP National Employment report for July that could offer more clues on the domestic labor market, ahead of much awaited non-farm payrolls data due on Friday.