NASDAQ 100, Dow Jones, S&P 500: Tech Stocks Stumble as Fitch’s US Rating Cut Spooks Market

Highlights

• U.S. stock index futures tumble after Fitch downgrade.
• Tech stocks suffer amid disappointing Qualcomm results.
• Fitch rating cut signals potential bearish market outlook.

Overview

Introduction U.S. stock index futures slipped on Thursday in the wake of Fitch’s downgrade of the country’s long-term rating, and as market players weighed in on the latest quarterly results. The market mood soured as growth projections wobbled and tech stocks stumbled, pushing the indices into the red.

 

Market Snapshot

At 09:30 GMT, S&P 500 futures retreated by 0.3%, while Nasdaq 100 futures saw a larger slump, shedding 0.4%. Dow Jones Industrial Average futures also lost ground, sinking 91 points or 0.26%. The downward swing follows a rough Wednesday for the tech-heavy Nasdaq Composite which plunged by over 2%—its steepest fall since February. Both the S&P 500 and Dow Jones Industrial Average closed the previous session lower.

Quarterly Results and Market Sentiment

Market sentiment was further dampened by underwhelming quarterly results from Qualcomm, with the chipmaker’s shares plunging 8% after missing revenue estimates and providing a tepid guidance for the current period. In contrast, DoorDash rallied 3.6% following a revenue beat. Investors are also anticipating reports from tech giant Apple and e-commerce behemoth Amazon due after the close.

Fitch’s Downgrade Impact

The primary trigger for the market dip was Fitch Ratings’ cut of the United States’ long-term foreign currency issuer default rating from AAA to AA+. The downgrade, citing a predicted “fiscal deterioration” over the next three years and weakening governance, halted the stocks’ previous strong rally led by growth names.

Economic Outlook and Future Trends

In terms of economic data, traders will now turn their attention to upcoming weekly initial jobless claims and durable goods orders. The key event, however, is the July payrolls report due on Friday. Amid a gloomy backdrop, these data releases will be critical in shaping the short-term trajectory of the markets. The recent market trends and the Fitch downgrade could potentially signal a bearish outlook, unless buoyed by strong upcoming economic indicators.