The US credit rating is being downgraded to AA+

The Dow Jones Industrial Average (DJIA) began half a percentage point lower on Wednesday after Fitch cut the US federal government’s credit rating from AAA to AA+.

However, Dow Jones Industrial Average, S&P 500 and Nasdaq-100 futures all fell by around 1% following the news.

The US debt has long been regarded as the safest of safe havens, but the downgrade on Tuesday implies it has lost some of its luster. The downgrading could have an impact on anything from mortgage rates in the United States to global contracts.

The action may encourage investors to sell US Treasuries, resulting in a rise in yields that serve as benchmarks for interest rates on a variety of loans.

Dow Jones Industrial Average News: Fitch surprises market with US downgrade

Fitch said the decision was triggered not only by the latest debt ceiling impasse, but also by “a steady deterioration in governance standards over the last 20 years” over “fiscal and debt matters.”

As a result, the US administration recently resolved a debt crisis with the Republican-controlled House of Representatives in late May. Republicans initially refused to lift the debt ceiling, but the Democratic Party, led by President Joe Biden, ended the disagreement by agreeing to certain budget cutbacks and an increase in military spending. Fitch blamed the downgrading on “erosion of governance” in the United States and a growing fiscal deficit.

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