Despite the downgrade of the U.S. national credit rating, the New York Stock Exchange closed mildly higher in a calm trend.
On the 19th (local time), the Dow Jones Industrial Average rose by 137.33 points (0.32%) from the previous day to close at 42,792.07. The Standard and Poor's (S&P) 500 Index increased by 5.22 points (0.09%) to 5,963.60, while the Nasdaq Composite Index finished up 4.36 points (0.02%) at 19,215.46.
This transaction corresponds to the first trading day following Moody's decision to downgrade the U.S. national credit rating from the previous highest rating of 'Aaa' to one notch lower at 'Aa1'. Moody's cited the accumulation of government fiscal deficits, the resulting increase in liabilities, and the weight of interest burdens as reasons that would limit flexibility in future budget management.
Initially, investor risk aversion due to the downgrade led to a weak start for the market, but in the latter half of the session, it reduced its losses and managed to rebound. Notably, the S&P 500 Index recorded its sixth consecutive day of gains.
U.S. Treasury Secretary Scott Beisner responded to Moody's downgrade by saying it was a 'lagging indicator' and noted, 'I do not trust Moody's.'
By stock category, UnitedHealth, the largest health insurance company in the U.S., saw its shares drop approximately 47% year-to-date due to the resignation of its chairman and poor performance, but surged 8.21% on the day following a similar increase on the 16th.
Meanwhile, U.S. Treasury yields exhibited stable trends without significant fluctuations despite the downgrade issue. According to TradeWeb, the yield on 30-year U.S. Treasury bonds was 4.91% on the day, rising 1 basis point from the previous trading day. The yield on 10-year bonds also increased by the same margin, reaching 4.45%.
At one point early in the session, the yield on 30-year bonds exceeded 5.03%, while the yield on 10-year bonds surpassed 4.5%, but subsequently, the rates turned to a downward trend, returning to levels similar to before Moody's downgrade.
Peter Cadillo, an economist at Spartan Capital Securities, analyzed that 'Moody's action is mainly symbolic, but the market reaction was limited.'