Wall Street is sagging again as a big rally that sent it to a 20-month high loses steam. The S&P 500 was 0.3% lower in early trading Tuesday and on track for its first back-to-back drop since October. The Dow fell 83 points, and the Nasdaq composite was off 0.4%. December’s loss of momentum comes after stocks charged higher through November on hopes the Federal Reserve may finally be done raising interest rates. More data will arrive later in the morning that could influence the Fed, whose next move on rates is due a week from Wednesday. Treasury yields fell.
Quick Read
- Wall Street Decline: U.S. stock futures indicated a lower opening for Wall Street, with Dow Jones Industrial Average and S&P 500 futures down 0.3% and 0.4% respectively.
- Moody’s Downgrades China’s Debt Rating: Moody’s Investor Service downgraded China’s sovereign debt rating, citing the impact of the country’s real estate crisis on local government and private financing.
- Asian Markets Reaction: Asian markets reacted negatively to the news, with Hong Kong’s Hang Seng Index dropping 1.9% and the Shanghai Composite Index losing 1.7%.
- Reasons for Downgrade: Moody’s cited a slowing economy and a crisis in China’s property sector as reasons for the downgrade, marking the first such action since 2017.
- Impact on U.S. Markets: The downgrade and China’s economic slowdown have affected U.S. markets, which have been recently buoyed by easing inflation and the potential end to the Federal Reserve’s interest rate hikes.
- Upcoming Economic Reports: Key reports on the U.S. economy, including the Institute for Supply Management’s services sector report, job openings, and unemployment claims, are due this week. The monthly jobs report for November is also expected.
- Global Market Movements: Japan’s Nikkei 225 and South Korea’s Kospi experienced declines, while Australia’s S&P/ASX 200 also fell. European markets showed mixed results midday, with France’s CAC 40 and Germany’s DAX rising slightly, but Britain’s FTSE 100 falling.
- Oil and Currency Markets: U.S. crude and Brent crude saw minimal changes, while the U.S. dollar weakened against the Japanese yen and the euro.
The Associated Press has the story:
Wall Street retreats after Moody’s downgrades China’s credit rating
Newslooks- NEW YORK (AP)
Wall Street headed lower early Tuesday after Moody’s Investor Service downgraded China’s sovereign debt rating as the country’s real estate crisis seeps into its local government and private financing.
Futures for the Dow Jones Industrial Average and the S&P 500 lost 0.3% and 0.4%, respectively.
In Asian trading, Hong Kong’s Hang Seng dropped 1.9% to 16,327.86, while the Shanghai Composite lost 1.7% to 2,972.30 as anxiety flared over weakness in the world’s second-largest economy.
Credit rating agency Moody’s cut its outlook for Chinese sovereign bonds to negative Tuesday, citing risks from a slowing economy and a crisis in its property sector.
Moody’s said the downgrade, its first for China since 2017, reflects risks from financing troubles of local and regional governments and state-owned enterprises.
Slowing economic growth in China weighed on U.S. markets that have been buoyed by signs of easing inflation and the potential for an end to the series of interest rate hikes put into place by the U.S. Federal Reserve to curb rising prices.
This week will bring several key updates on the economy.
The Institute for Supply Management will release its November report on the services sector Tuesday. The sector accounts for the majority of jobs in the U.S. The report could provide more insight into consumer spending and the jobs market.
The government will release its October update on job openings on Tuesday and a weekly report on applications for unemployment benefits on Thursday.
The government’s monthly jobs report for November arrives Friday. Analysts polled by FactSet believe U.S. employers added 175,000 jobs last month. They forecast that the unemployment rate remained steady at 3.9%.
Japan’s benchmark Nikkei 225 slipped 1.4% to finish at 32,775.82. Australia’s S&P/ASX 200 dipped 0.9% to 7,061.60. South Korea’s Kospi shed 0.8% to 2,494.28.
A key report on Japanese inflation showed core consumer prices in Tokyo, which excludes volatile food prices, rose 2.3% from a year ago, slowing from previous months’ increases.
In Europe at midday France’s CAC 40 and Germany’s DAX each rose nearly 0.3%, while Britain’s FTSE 100 fell 0.5%.
Benchmark U.S. crude added lost 2 cents to $73.02 a barrel. It fell 1.4% on Monday. Brent crude, the international standard, fell 5 cents to $77.98 a barrel.
The U.S. dollar fell to 147.07 Japanese yen from 147.19 yen. The euro cost $1.0820, down from $1.0838.
