Wall St set for lower open after Fitch downgrades top-tier US rating By Reuters

By Johann M Cherian and Bansari Mayur Kamdar

(Reuters) -Wall Street was set to open lower on Wednesday after rating agency Fitch’s move to downgrade the U.S. government’s credit rating hit appetite for risky assets around the world.

Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years as well as a growing general government debt burden, making it the second major rating agency after Standard & Poor’s move in 2011 to strip the country of its triple-A rating.

The yield on U.S. slipped to 4.04%. Safe havens gold and the Japanese yen rose, while the edged higher. [US/]

“We’re headed for a lower opening because the Fitch downgrade is causing a bit of a selloff,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“All that is important is that it’s a wake up call for the politicians because of prolonged agreements and fiscal irresponsibility.”

At 08:33 a.m. ET, were down 148 points, or 0.41%, were down 27.75 points, or 0.6%, and were down 133.5 points, or 0.84%.

Megacap stocks including Tesla (NASDAQ:), Nvidia (NASDAQ:), Meta Platforms and Microsoft (NASDAQ:) fell between 0.9% and 2.0% in premarket trading.

Meanwhile, the ADP National Employment report showed private payrolls increased more than expected in July, pointing to continued labor market resilience that could shield the economy from a recession.

Beating the trend, Advanced Micro Devices (NASDAQ:) rose 2.2% after forecasting an upbeat finish to the year and on plans to launch AI chips that could compete with market leader Nvidia.

U.S. second-quarter earnings are now expected to fall 5.9% from a year earlier, as per Refinitiv data, compared with a 7.9% decline estimated a week earlier.

The benchmark and tech-heavy Nasdaq took a breather in the previous session as investors entered a seasonally slow August. The blue-chip loaded Dow ended higher, underpinned by gains in Caterpillar (NYSE:) after the global economic bellwether posted upbeat quarterly profits.

Among other early movers, Starbucks (NASDAQ:) eased 1.1% after the world’s largest coffeehouse chain missed market expectations for quarterly comparable sales.

CVS Health Corp (NYSE:) shed 0.9% even as it reported upbeat second-quarter earnings, and said it had begun implementing a restructuring program to cut costs after a recent spree of acquisitions.

DuPont de Nemours (NYSE:) fell 1.4% on reporting a 7% fall in quarterly revenue due to weakness in the electronics and industrial unit.

Emerson (NYSE:) climbed 4.8% after the industrial software firm raised its annual profit outlook as companies increase spending on automation in response to a tight labor market.

Wells Fargo (NYSE:) said it expects to pay as much as $1.8 billion to help replenish a government deposit insurance fund that was drained of $16 billion this year after three banks collapsed, sending its shares 0.9% lower.

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