US Treasury Secretary Yellen: Strongly opposed, sudden! Fitch downgrades its rating for the United States

On August 1st local time, the three major US stock indexes showed mixed trends, with the Dow reaching its highest level in over a year during trading, while the Nasdaq and S&P indexes slightly declined. As of the close, the Dow Jones index rose 0.2%, the Nasdaq index fell 0.43%, and the S&P 500 index fell 0.27%.

On the news front, one of the three major rating agencies, Fitch Ratings, has downgraded the long-term foreign currency debt rating of the United States from AAA to AA+, and its outlook has shifted from negative to stable. This is the first time Fitch has downgraded the country's credit rating since its first release in 1994. US Treasury Secretary Yellen strongly opposes the decision of Fitch Ratings; Fitch's decision to downgrade the US rating is "arbitrary" and "outdated"; President Biden is committed to the sustainability of the US fiscal system.

In 2011, another international rating agency, Standard&Poor's, downgraded the US sovereign debt rating to AA+for the first time in its history.

Fitch downgrades the US rating to AA+

On August 1st local time, Fitch announced a downgrade of the US rating to AA+, with a stable outlook.

Fitch Ratings stated that the downgrade of the US sovereign credit rating indicates an expected fiscal deterioration in the Biden administration, reflecting expectations of a higher and growing overall government debt burden over the next three years.

Fitch predicts that the proportion of the US general government deficit to GDP will increase from 3.7% in 2022 to 6.3% in 2023, expand to 6.6% in 2024, and further expand to 6.9% in 2025.

In addition, Fitch expects the Federal Reserve to further raise interest rates by 25 basis points in September, pushing the federal funds rate up to the range of 5.5% to 5.75%. Fitch Ratings pointed out that due to factors such as tightening credit conditions, weak commercial investment, and slowing consumption, the US economy may enter a "mild" recession in the fourth quarter of this year and the first quarter of next year.

On June 3rd local time, US President Biden signed a bill on the federal government's debt ceiling and budget, officially taking effect, temporarily avoiding the US government from defaulting on its debts. The bill temporarily suspends the effectiveness of the debt ceiling until early 2025 and imposes restrictions on expenses for fiscal years 2024 and 2025. Prior to this, the US debt ceiling had triggered constant fighting between the two parties. Fitch placed the US AAA rating on the "negative watch list" when the US debt ceiling debate was raging on May 24 this year, and warned that the US credit rating might be downgraded.

Currently, among the three major rating agencies, only Moody's maintains an AAA rating for the United States. S&P has rated long-term foreign currency debt issuers in the United States as AA+- a level that has been maintained since the downgrade in 2011, with a stable outlook.

In response, US Treasury Secretary Yellen strongly disagrees with Fitch's downgrade of the US rating. Yellen called Fitch's downgrade of the US rating "arbitrary," "arbitrary," and "outdated," and President Biden is committed to the sustainability of the US Treasury.

Yellen said: "I strongly disagree with Fitch's decision. Fitch's decision has not changed the fact that Americans, investors and people around the world have already known: the US treasury bond bond is still the safest and most liquid asset in the world, and the US economy is fundamentally strong."

In addition, officials from the Biden administration spoke about Fitch's downgrade of the US rating, stating that the downgrade is not expected to have an impact on the US borrowing costs; The decision by Fitch to downgrade the US rating overlooks the resilience and potential strength of the US economy.

However, some market analysts believe that Fitch's recent downgrade of the US rating may cause turbulence in the US and even global financial markets on Wednesday. As of the start of Wednesday's Asia Pacific session, S&P 500 stock index futures fell 0.54%, Dow Jones futures fell 0.45%, and Nasdaq futures fell 0.63%.

Since the Dow Jones Industrial Average hit a new high over a year ago, the Nasdaq and S&P indexes have closed lower during trading

Returning to the market on that day, on August 1st local time, the three major US stock indexes closed with mixed gains and losses. The Dow Jones closed up 71.15 points, or 0.20%, at 35630.68 points; The Nasdaq fell 62.11 points, a decrease of 0.43%, to 14283.91 points; The S&P 500 index fell 12.23 points, or 0.27%, to 4576.73 points.

On Tuesday, the Dow Jones Industrial Average rose as high as 35679.13 points, marking its highest intraday level since February 2022.

The job vacancy and labor mobility survey report released on Tuesday showed that there were 9.6 million job vacancies in the United States in June, the lowest since April 2021. The number of layoffs in June was 1.5 million, almost the same as the data in May. Analyst Christian Robles said that the US labor market is showing new signs of easing, and the slow reduction in job vacancies further indicates that the Federal Reserve is making progress in cooling the economy and lowering inflation.

Factory activity in the United States shrank for the ninth consecutive month in July, reflecting weak demand for its products both domestically and internationally. According to data released by the American Society for Supply Management on Tuesday, the manufacturing activity index slightly rose to 46.4 last month. Data below 50 indicates contraction, with the latest data slightly below expectations. The manufacturing industry is generally weak, forcing factories to lay off workers. The ISM employment index has dropped to 44.4, the lowest level since July 2020.

Room temperature superconductivity may have a major breakthrough, with American superconducting companies rising by over 60%

In terms of sectors, the 11 major sectors of the S&P 500 index saw two gains and nine losses, with the industrial sector and information technology sector leading the way with gains of 0.32% and 0.09%, respectively. The utility sector and optional consumer sector led the way with losses of 1.26% and 1.15%, respectively.

Large tech stocks saw little increase but more decline, with AMD and Broadcom up over 2%, Facebook parent company Meta up over 1%, Ericsson, Microsoft, and Intel slightly up, Qualcomm, Netflix, Apple, Boeing, Nvidia, Asma, TSMC, and Google A slightly down, Amazon down over 1%, and Tesla down over 2%.

Tesla fell 2.38%, with a transaction of $21.624 billion. The US National Highway Traffic Safety Administration is investigating the newer Tesla Model 3 and Model Y in response to 12 reports of drivers losing steering control and power steering. NHTSA issued a notice yesterday stating that the Defects Investigation Office is conducting a preliminary evaluation of the 2023 Tesla Model 3/Y vehicle due to reports of the vehicle being unable to turn and losing power to turn. The office has initiated a preliminary assessment to assess the scope, frequency, manufacturing process, and severity associated with this situation. The survey scope includes 280000 Model 3/Y cars.

AMD closed 2.8% higher with a transaction of $9.304 billion. The company announced its results after the close of trading on Tuesday, with Q2 revenue of $5.4 billion and analysts expecting $5.32 billion.

Facebook parent company Meta closed up 1.29%. Meta Platforms is preparing to launch a series of artificial intelligence chatbots showcasing different personalities as early as next month to increase engagement on social media platforms.

Financial stocks mostly fell, with Nomura Holdings falling more than 7%, Barclays and Bank of America falling more than 2%, Mizuho Financial, UBS Group, Citigroup, Bank of America, and Deutsche Bank falling more than 1%, while Wells Fargo, BlackRock, Morgan Stanley, Credit Suisse, JPMorgan Chase, First Capital Finance, Bank of New York Mellon, Metropolitan Life, Traveler Insurance, and Regional Finance saw a slight decline, while Hartford Financial, Costco Insurance, American International Group, American Express, Sinovac, Mastercard, Goldman Sachs, and Visa saw a slight increase.

Energy stocks fell across the board, with Brazilian oil falling more than 3%, Carloon oil falling more than 2%, US energy and Duke energy falling more than 1%, while Shell, BP, Chevron, Imperial Oil, Apache Oil, ExxonMobil, Marathon Oil, and ConocoPhillips saw a slight decline.

BP closed down 0.91%. BP Q2 revenue was $48.54 billion, a year-on-year decrease of 28.5%, slightly higher than the expected $47.822 billion; Earnings per share were $0.6, a significant decrease from $2.83 in the same period last year. The company plans to distribute a quarterly dividend of 7.270 cents per share. The strengthening of the US dollar and profit taking trading have put pressure on oil prices. The West Texas Intermediate crude oil futures for September delivery on the New York Mercantile Exchange fell 43 cents, a decrease of 0.52%, to close at $81.37 per barrel. On the previous trading day, the futures reached its highest closing price since April 14th.

Most popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index falling more than 2%. Huya fell more than 7%, Bilibili fell more than 6%, Kingsoft Cloud, NIO, Tencent Music, and Xiaopeng Motors fell more than 4%, Tiger Securities, iQiyi, and JD.com fell more than 3%, Alibaba fell more than 2%, Baidu and Ctrip fell more than 1%, Futu, Vipshop, and New Oriental fell slightly, Pinduoduo and NetEase rose slightly, and Ideal Automobile rose more than 3%.

Ideal Automobile closed up 3.67%. According to the official WeChat account of Ideal Automobile, as of July 30th, the sales of Ideal Automobile in July have reached a new high of 32500 units.

Xiaopeng Motors closed down 4.67%. On August 1st, Xiaopeng Motors released data showing that a total of 11000 new cars were delivered in July this year, an increase of 28% compared to the previous month. Among them, the Xiaopeng G6, which had previously started delivery, delivered over 3900 vehicles in July.

Faraday Future closed 10% higher, announcing the official launch of the company's second phase of co creation and delivery, and will deliver the FF 91 2.0 Futurist Alliance to the first batch of users.

Driven by news of research progress in room temperature superconductivity, American superconducting companies have surged by over 60%. Taiji Quantum of the United States, which wants to compete with relevant research teams in South Korea for the "first" of room temperature superconducting materials, released photos saying that a new room temperature superconducting material, a graphene foam material, is very fragile.

In other markets, major European indices closed lower on Tuesday, with the DAX30 index in Germany falling 1.26%, the FTSE 100 index in the UK falling 0.43%, the CAC40 index in France falling 1.2%, and the Stoxx 50 index in Europe falling 1.4%.

The gold futures for October delivery on the New York Mercantile Exchange fell 1.51% to close at $1959.20 per ounce. The US dollar and US treasury bond yields climbed, putting pressure on gold prices.