After downgrading its U.S. credit rating outlook from stable to negative, Moody’s Investors Service saw a decline in U.S. stocks on Monday.
47 points, or 0.1%, were dropped by the Dow Jones Industrial Average. Both the Nasdaq Composite and the S&P 500 experienced 0.6% and 0.4% declines, respectively.
Via their respective declines of 3.4%, 4.2%, and 3% shortly after the open, V.F., Illumina, and Boston Properties led the S&P 500’s losses. With Emirates announcing a $52 billion purchase for 95 aircraft, Boeing shares increased by more than 4%.
The “extremely significant” budget deficits in the United States and the partisan deadlock in Washington were highlighted by Moody’s on Friday as contributing causes to the downgrade. America’s highest credit rating of AAA was confirmed by the rating agency. The U.S. long-term foreign currency issuer default rating was downgraded by Fitch to AA+ from AAA three months prior, citing political impasse over debt and fiscal issues, rising debt levels, and anticipated fiscal deterioration.
Following the shift in expectations, Treasury rates increased on Monday. The benchmark 10-year yield increased to 4.686%, a rise of 6 basis points.
Investors’ response to Moody’s downgrading is evident, but there is also caution on certain significant events that are scheduled for this week. According to AXS Investments CEO Greg Bassuk, “we believe that everyone is watching this week’s inflation figures and the Fed’s subsequent policy.”
Bassuk anticipates that the market will remain volatile through the end of the year in light of this, particularly in light of the ongoing battles abroad. This has caused the Grinch to “fuel the Christmas rally this year,” along with conflicting economic statistics.