Stock market today: Dow down as U.S debt ratings downgrade, chip dent in tech bite

Investing.com -- The Dow dropped Wednesday, as an AMD-fueled slump in tech and the Fitch Ratings downgrade of U.S debt weighed on investor sentiment.  

The Dow Jones Industrial Average fell 0.1%, or 348 points, Nasdaq was down 2%, and the S&P 500 fell 1.4%.

Fitch Ratings downgrade largely dismissed, but still dents sentiment

Fitch downgraded the United States to AA+ from AAA, on worries about fiscal deterioration over the next three years. While the rating agency’s downgrade was largely downplayed, it weighed on investor sentiment.

JPMorgan chief executive Jamie Dimon said the downgrade was “ridiculous,” and added that “it doesn’t really matter that much” as the assessment was based on factors that were already known.

U.S. Treasury Secretary Janet Yellen described the downgrade as “flawed,” saying it was "based on outdated data.”

AMD leads dent in chip stocks as tech sinks

Advanced Micro Devices Inc (NASDAQ:AMD) tumbled more than 7% after the chipmaker reported better-than-expected quarterly results, but revenue and operating income fell in Q2 from a prior-year period, while current-quarter guidance missed Wall Street estimates.

“Guidance for CQ3 was arguably disappointing, [but] we believe AMD has a leadership position in server CPUs that should yield more significant future share growth when spending rebound,” Wedbush said in a note.

The slump in AMD sent other chipmakers including NVIDIA Corporation (NASDAQ:NVDA) and Marvell Technology Group Ltd (NASDAQ:MRVL) sharply lower.

Starbucks, CVS Health shine on earnings stage

Starbucks Corporation (NASDAQ:SBUX) rose almost 1% after its Q2 earnings topped estimates, though weaker-than-expected revenue kept a lid on gains.

The coffee giant’s same store sales growth in the U.S. of 7% missed Wall Street estimates.  

“[I]t also creates questions on whether domestic comps decelerate further and/or if 2024 EPS estimates are tilting aggressively,” Oppenheimer said in a Wednesday note.

CVS Health (NYSE:CVS), meanwhile, rose almost 4% after reporting a beat on both the top and bottom lines. Concerns about the retail pharmacy’s long-term profit growth emerged. However, chief financial officer Shawn Guertin said its EPS targets for 2024 and 2025 were no longer “reasonable.”

Jobs market in upside surprise as July private payrolls tops estimates

On the labor market front, private payrolls grew by 324,000 in July, a decline from the 455,000 in June, but that beat economists’ forecast of 189,000.

Despite the hotter than expected private jobs report, some economists continue to believe that the labor market is slowing as the Federal Reserve’s rate hikes seen so far filters through the economy.

“The U.S. labor market still has a ways to go before conditions have normalized, but every step in the right direction is a welcome indication that earlier policy action is having the intended effect of slowing the economy and the labor market in order to reinstate price stability,” Stifel said in a note.