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© Reuters.
Investing.com -- U.S. stocks were falling on Wednesday after the surprise downgrading of the country’s top-tier credit rating by Fitch, while the quarterly corporate earnings season continues.
At 11:22 ET (15:22 GMT), the Dow Jones Industrial Average was down 269 points or 0.7%, while the S&P 500 was down 1.3% and the NASDAQ Composite was down 2.1%.
Risk sentiment took a hit after Fitch downgraded the U.S. government’s credit rating to AA+ from AAA late Tuesday, citing likely fiscal deterioration over the next three years and repeated fraught debt ceiling negotiations.
Fitch became the second major rating agency after Standard & Poor’s move to strip the United States of its triple-A rating in 2011, but this decision brought a sharp response from the U.S. government, with Treasury Secretary Janet Yellen calling it "arbitrary and based on outdated data."
After the initial losses, “markets will likely see it in a similar way (i.e. strictly tied to the debt ceiling standoff) especially in a week full of important data releases and with the next Federal Reserve rate hike hanging in the balance,” said analysts at ING, in a note.
Strong earnings have largely helped stocks this reporting season, with around 82% of the S&P 500 companies having reported posting positive surprises, according to FactSet data.
Pharmacy chain and health provider CVS Health (NYSE:CVS) rose 3.1% after strong earnings and revenue for the second quarter. Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) fell 2.7% after the cruise operator posted weaker-than-expected guidance for the third quarter. Shares of Advanced Micro Devices Inc (NASDAQ:AMD) also slipped 6.7% after the chipmaker posted better-than-expected results.
Chipmaker Qualcomm (NASDAQ:QCOM) and website platform Shopify (NYSE:SHOP) are scheduled to report after the close.
Starbucks (NASDAQ:SBUX) stock rebounded 3% after its global comparable sales missed estimates, as demand for the Frappuccino maker's drinks and food showed signs of slowing in North America.
Turning to economic data, the July ADP jobs report said private employers added a much stronger than expected 324,000 positions in July, while expectations were for the addition of 189,000 jobs. The government's broader report on July labor trends is due on Friday.
The Fed won't meet to decide on rates again until September, and Chair Jerome Powell pointed out last week the importance of upcoming data in helping the policymakers decide upon the future path of interest rates.
(Oliver Gray and Peter Nurse contributed to this article.)
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