The Dow Jones Industrial Average encountered a sharp downturn of 350 points on Tuesday, responding to the impactful credit rating decision pronounced by Moody’s concerning US banks.
Moody’s embarked on a noteworthy course by downgrading the credit ratings of ten prominent US banks in unison. Additionally, it subjected six other major banks to a negative review, while concurrently adjusting the outlook downward for eleven other US banks.
This weighty pronouncement follows mere days after Fitch Ratings jolted the financial landscape with its stunning downgrade of the US government’s creditworthiness.
Parallel to these developments, Chinese customs data divulged an alarming 14.5% year-on-year contraction in exports during July, marking the most substantial decline since February 2020. The export figures to the United States from China were even more staggering, plummeting by 23.1%.
Market participants are currently on edge, awaiting the imminent release of the most recent inflation data for July, scheduled for disclosure on Thursday. This data will offer insights into US consumer prices.
In the realm of fixed income, the yields on the US 10-year treasury experienced a significant dip of 9 basis points, culminating at 4.0992%. Concurrently, the 30-year yields mirrored this retreat, receding by an equivalent measure to settle at 4.179%.
Patrick Harker, the President of the Philadelphia Federal Reserve, shared fresh insights into the economic landscape. Harker’s statements indicate that the prevailing economic conditions do not warrant a tightening of policy measures in the forthcoming September period.
Harker’s articulated outlook strongly suggests that the Federal Reserve will maintain the current interest rate levels, pending a comprehensive assessment of the far-reaching repercussions stemming from recent policy determinations across the economy.
Harker also sounded a cautionary note, expressing skepticism regarding an imminent interest rate hike. He further prognosticated a trajectory for the US economy characterized by a gentle recession and a deceleration in economic momentum during the latter part of the year.
Turning attention to the trading floor, the Dow Jones Industrial Average encountered a substantial contraction of 0.9%, equating to a loss of 340 points, bringing the index to 35,133. Simultaneously, the S&P 500 index” data-wpil-keyword-link=”linked”>S&P 500 index registered a decline of 1.1%, shedding 49 points to settle at 4,469. The NASDAQ Composite Index followed suit with a decline of 1.5%, marking a slide of 212 points, bringing its value to 13,784.