NASDAQ Index, SP500, Dow Jones Analysis – Stocks Retreat As Fitch Cuts U.S. Rating To AA+

Key Insights

• SP500 moved below the 4520 level as traders reacted to U.S. debt downgrade. 
• NASDAQ declined by 2% amid a strong sell-off in tech stocks. 
• Dow Jones pulled back towards the 35,300 level. 

SP500

SP500 declined by more than 1% as traders reacted to Fitch Ratings decision to downgrade the U.S. long-term foreign-currency issuer default rating from AAA to AA+. The agency assigned a Stable Outlook to the rating. According to Fitch, the rating downgrade reflected the expected fiscal deterioration over the next three years. In addition, Fitch highlighted the steady deterioration in standards of governance over the last 20 years, rising general government deficits, and medium-term fiscal challenges.

Traders used the U.S. debt downgrade as an excuse to take some profits off the table near yearly highs. SP500 has recently made several attempts to settle above the 4600 level, but these attempts yielded no results. Currently, it is moving towards the support in the 4430 – 4450 range.

NASDAQ

NASDAQ suffered a sell-off as traders focused on U.S. debt downgrade and rising Treasury yields. The better-than-expected ADP Employment Change report, which showed that private businesses added 324,000 jobs in July, did not provide any support to major indices.

NASDAQ is moving towards the support in the 15,200 – 15,300 range. The 200 MA is located near the 15,300 level, so NASDAQ will likely get material support near this area. In case NASDAQ settles below 15,200, it will head towards the next support level at 14,560 – 14,680.

Dow Jones

Dow Jones moved lower amid a broad pullback in the equity markets. Dow Jones performed better than SP500 and NASDAQ as Consumer Defensive stocks received some support in today’s trading session. Traders were searching for safe-haven assets amid a strong sell-off, which was bullish for Consumer Defensive stocks.

From the technical point of view, Dow Jones did not manage to settle above the resistance at 35,400 – 35,550. If Dow Jones gains additional downside momentum, it will head towards the support in the 35,000 – 35,100 range.

For a look at all of today’s economic events, check out our economic calendar.