U.S. stock indexes started the day on a downward trend, with financial stocks taking a hit following Moody’s decision to downgrade the credit rating of several small- to mid-sized U.S. banks. Moody’s also announced the possibility of lowering the ratings on six major banks, including U.S. Bancorp, State Street Corp., and Bank of New York Mellon Corp.
The Dow Jones Industrial Average (DJIA) experienced a drop of 247 points, or 0.7%, reaching 35,224. Similarly, the S&P 500 and the Nasdaq Composite saw declines of 0.7% and 0.8% respectively.
China’s Trade Faltered in July
Data from Tuesday revealed that China’s trade experienced a more significant decline than expected in July. The country’s exports plunged by 14.5% compared to the previous year, marking the largest decline since the outbreak of the COVID-19 pandemic in February 2020. Additionally, imports slid 12.4%, worse than initially forecasted.
Moody’s Considers Credit Rating Cuts for Major U.S. Banks
On Tuesday, bank shares took center stage as Moody’s Investor Service stated its intention to potentially lower credit ratings for six major U.S. banks. This decision comes as the country’s banking sector grapples with “interest rate and asset and liability management risks with implications for liquidity and capital,” according to the credit ratings agency.
According to FactSet data, shares of U.S. Bancorp fell by 4.1%, while State Street Corp. dropped 2.5%, and Bank of New York Mellon Corp. experienced a decline of 2.1%.
