Despite US Credit Rating Downgrade, 'Calm'... Major Indices Close 'Slightly Up' [New York Stock Market Briefing]

On the 19th (local time), the first trading day after the announcement of the US national credit rating downgrade, the New York Stock Exchange closed slightly up.

On this day, the Dow Jones Industrial Average closed at 42,792.07, up 137.33 points (0.32%) from the previous day. The Standard & Poor's (S&P) 500 index rose 5.22 points (0.09%) to 5,963.60, and the Nasdaq Composite Index closed at 19,215.46, up 4.36 points (0.02%).

Previously, global credit rating agency Moody's downgraded the US national credit rating from the highest rating of 'Aaa' to 'Aa1', citing the accumulation of fiscal deficits, the resulting increase in debt, and the burden of interest payments, which would limit future budgetary flexibility.

US Treasury Secretary Scott Besant reacted to Moody's credit rating downgrade by saying it was a "lagging indicator" and that he "does not trust Moody's."

Despite the credit rating downgrade, US Treasury yields showed a stable trend with little fluctuation. According to Tradeweb, the 30-year US Treasury yield recorded 4.91% on this day, up 1bp (1bp=0.01% point) from the previous trading day. The 10-year yield also rose by the same margin to 4.45%.

In the early session, the 30-year yield briefly exceeded 5.03% and the 10-year yield exceeded 4.5%, but later the yields turned downward, returning to levels similar to before Moody's downgrade.

Federal Reserve (Fed) officials continued to express caution about rate cuts. Fed Vice Chair Philip Jefferson said in a public statement that day, "We will consider how this credit rating downgrade, like all other information, will affect our policy goals, but I will not comment on what this downgrade means in a political and economic context."

John Williams, President of the Federal Reserve Bank of New York, also emphasized at an event in New York that "investors are carefully considering their future investment decisions in US Treasuries and dollar assets, but still evaluate the US as a good place to invest," highlighting the attractiveness of the US financial market.

Tech stocks showed mixed results. Tesla and Apple fell by 2.25% and 1.17%, respectively. Tesla's stock seems to have been dragged down by news that China's Xiaomi will soon unveil a vehicle that can compete with Tesla's Model Y. Microsoft (1.01%), Amazon (0.28%), Alphabet (0.26%), and Nvidia (0.13%) closed slightly up.

Novavax surged 15% as its COVID vaccine received final approval. TXNM Energy jumped 7% after announcing that Blackstone Infrastructure would acquire it for $11.5 billion. Regeneron announced it would acquire the gene testing company '23andMe', which is on the brink of bankruptcy, for $256 million, but its stock only rose 0.4%.

Reporter Jeongdong Noh, Hankyung.com dong2@hankyung.com