Day Traders Diary

8/2/23

The major averages took a hit today falling over a percent with the Nasdaq Composite registered its worst day since February, after Fitch downgraded the long-term rating for the U.S. and risk-off sentiment resurfaced. The tech-heavy index shed 2.17% or 310 points to end at 13,973while the S&P 500 pulled back 63 points or 1.38% to close at 4,513. The Dow Jones Industrial Average tumbled 348 points, or 0.98%, to finish at 35,282.

Fitch Ratings cut the long-term foreign currency issuer default rating for the U.S. to AA+ from AAA Tuesday night, citing "expected fiscal deterioration over the next three years." The last time the U.S. got a downgrade from a major ratings agency was in 2011 when Standard & Poor's cut the rating to AA+ from AAA. The 10-year Treasury yield hit its highest level since November.

Earnings season is more than halfway through with results coming in stronger than expected. Of the S&P 500 companies that have reported, about 82% have posted positive surprises, according to FactSet data. The earnings beats have added to bullish investor sentiment, continuing this year's recovery.

Elsewhere, the latest ADP jobs report showed that the private sector added 324,000 jobs in July. That far exceeded the jobs gains expected by economist polled by Dow Jones, but marked a decrease from June's downwardly revised 455,000.

These moves follow a lackluster first day of trading to start August. On Tuesday, the S&P 500 fell 0.27%, while the Nasdaq Composite declined 0.43%. The Dow Jones Industrial Average added 71.15 points, or 0.2%, and reached its highest level since February 2022 at one point in the session.