Wall Street tumbled to its worst day in months as its torrid rally that critics called overdone lost more momentum. The S&P 500 fell 63.34 points Wednesday, or 1.4%, to 4,513.39 for its sharpest drop since April. It was the index's second straight loss after hitting a 16-month high last week The Dow Jones Industrial Average fell 348.16 points, or 1%, to 35,282.52. Bond yields were mixed after Fitch cut the US government's credit rating. The downgrade strikes at the core of the global financial system because US Treasurys are considered some of the safest possible investments , but it's so far caused less drama than a similar cut in 2011, the AP reports.
While the downgrade highlights how much debt the US government has and the big challenges it faces in how to pay for Social Security, Medicare, and other expenses, none of that is news for investors. "Fitch's downgrade is much ado about nothing," says Brian Jacobsen, chief economist at Annex Wealth Management. "Yes, it's good to call out the fiscal situation, but when a country only issues debt in its own currency, the credit rating is irrelevant. Every investment fund I've looked at specifies that US Treasury securities are allowed investments, regardless of what a credit rating agency might think."
Several Big Tech stocks pulled the market lower Wednesday. Microsoft, Nvidia, and Amazon all fell at least 2.5% and were some of the heaviest weights on the S&P 500. Generac Holdings, which sells generators and other power products, tumbled 24.8% after it reported weaker profit for the spring than analysts expected. SolarEdge Technologies dropped 17.9% after reporting weaker profit and revenue growth than forecast. It said higher interest rates are pressuring US residential customers. On the winning side of Wall Street was CVS Health, which rose 3.4%. after the retail pharmacy chain reported a milder drop in results than expected. Humana climbed 5.1% after it topped expectations for the latest quarter. (More stock market stories.)
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