US stocks fell across the board on Wednesday after rating agency Fitch downgraded the US government’s credit rating late Tuesday.
The agency stripped the US of its AAA rating in favor of an AA+, citing fiscal and political instability; debt and political instability (including the January 6th insurrection) factored into their decision. In 2011 Standard & Poor’s stripped the country of its triple-A grade.
The S&P 500 (^GSPC) dropped 1.3%, while the Dow Jones Industrial Average (^DJI) fell nearly 1%, or over 300 points. The tech-heavy Nasdaq Composite (^IXIC) declined more than 2%.
The downgrade drew an angry response from the Biden administration, with the Treasury Department calling it “arbitrary” after the White House and Congress just averted a debt default more than two months ago.
Still, Fed Chairman Jerome Powell said that Fed staff is no longer forecasting a recession.
“We do have a shot” for inflation to return to target without heavy job losses, Fed Chairman Jerome Powell said.
