Stock futures on the New York Stock Exchange slid lower on Wednesday morning after Fitch downgraded its U.S. Credit Rating from AAA to AA+. Fitch is the second of the three major ratings firms to downgrade the U.S. following the debt ceiling battle earlier in the year and an uncertain debt outlook going forward.
Futures on the benchmark S&P 500 index fell by 1% while those on the tech-heavy Nasdaq Composite Index slumped 1.3% lower. Contracts on the Dow Jones Industrial Index fell by 270 points, or 0.8%, thereby slipping from its 71-point gain on Tuesday.
“Whilst not a game-changer, news that Fitch downgraded the U.S. credit rating by a notch was enough to put risk appetite on the back foot as evidenced by the red numbers across the board,” Tim Waterer, an analyst at broker KCM Trade reflected.
Adding to investors’ risk aversion is the upcoming U.S. jobs report which they’ll look to for guidance before making any significant investment decisions.