Here are the most important news items that investors need to start their trading day:
1. Downgrade weighs down
Markets struggled Tuesday after starting the week strong. The Dow fell more than 450 points at its session lows, but recovered some ground and closed 158.64 points lower, or down 0.45%. The S&P 500 dropped 0.42%, and the Nasdaq Composite was 0.79% lower. The sell-offs came after Moody’s cut ratings for 10 U.S. banks and put some big names on downgrade watch. Futures were off to a more positive start Wednesday, however, with all three indexes showing gains. Follow live market updates.
2. End in sight?
Is the Federal Reserve done hiking interest rates? Philadelphia Fed President Patrick Harker — a voter this year on the rate-setting Federal Open Market Committee — thinks that might be the case. He cautioned that his prediction was based on current data and could change, but said “I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work.” He also said he believes any cuts are unlikely. The Fed has hiked rates 11 times since March 2022, bringing them to their highest level in more than 22 years.
3. Credit card debt
Americans keep on spending. Aggregate credit card balances topped $1 trillion for the first time ever, the New York Federal Reserve reported on Tuesday. Total credit card indebtedness rose by $45 billion in the second quarter of 2023, an increase of over 4%. Meanwhile, total household debt also hit a fresh record, reaching $17.06 trillion. Fed researchers attributed the rise in credit card balances to inflationary pressures and higher levels of consumption.
4. WeWork’s warning
Former IPO sensation WeWork is warning of possible bankruptcy. The company, which was once valued by SoftBank at $40 billion, went public in 2021 after its financials were criticized in its first IPO attempt in 2019. It was hurt by the surge in remote work that came with the Covid pandemic, as well as the subsequent economic slump. WeWork’s stock fell 26% in extended trading Tuesday after the news was released, bringing its market cap below $500 million.
5. UN condemns strikes
Denise Brown, the United Nations’ humanitarian coordinator for Ukraine, denounced an attack on Ukraine’s Pokrovsk, in eastern Donetsk. She said missiles struck the same location twice, meaning front-line workers were hit. Ukrainian President Volodymyr Zelenskyy said nine people died in that attack and 82 were injured. Meanwhile, Moscow said it shot down two drones that were approaching the city overnight. There were no damages or injuries, but they’re the latest vessels to be intercepted by air defense systems in Russia’s capital. Ukraine did not claim responsibility for sending the drones, though Zelenskyy has said war is “returning to Russia’s territory.”
— CNBC’s Sarah Min, Jeff Cox, Jordan Novet and Jenni Reid contributed to this report.
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