US Stocks Close Lower After Fitch Downgrades U.S. Ratings and Bond Yields Enter Volatile Territory

The US stock market experienced a downward trend on Friday, marking the end of a turbulent week. This decline was largely attributed to Fitch’s decision to downgrade the U.S. ratings from its top AAA status, as well as the rollercoaster ride of government bond yields.

Stock Performance

• The Dow Jones Industrial Average (DJIA) fell approximately 150 points, or 0.4%, ultimately closing near 35,065, according to preliminary FactSet data.
• The S&P 500 index shed 0.5% and the Nasdaq Composite Index closed 0.4% lower.

Weekly Performance

Looking at the week as a whole, there were notable declines across the board:

• The Dow experienced a 1.1% decline
• The S&P 500 dropped by 2.3%
• The Nasdaq shed 2.9% since Monday, according to FactSet data.

Impact of July Jobs Data

Investors closely monitored the release of July jobs data on Friday for insights into the overall health of the economy and potential actions that may be taken by the Federal Reserve regarding interest rates.

Volatility in Bond Yields

Government bond yields underwent significant volatility throughout the week:

• The 10-year Treasury yield initially climbed to about 4.2% before swinging almost 13 basis points lower on Friday to 4.06%, based on FactSet data.

Despite these fluctuations, investors remained cautious and sought clarity amid the changing market conditions.