S&P 500 Futures Retreat as Moody’s Puts U.S. Rating Under Review

Posted: July 13, 2011 in US News

Bloomberg
Nick Baker and Whitney Kisling
July 13, 2011

July 14 (Bloomberg) — U.S. stock-index futures fell after Moody’s Investors Service said the American government may lose the Aaa credit rating it’s held since 1917.

Standard & Poor’s 500 Index futures expiring in September dropped 0.4 percent to 1,306.60 at 7:25 a.m. in Tokyo.

Moody’s began its first U.S. review since 1995 as talks to raise the $14.3 trillion debt limit stall, adding to concern political gridlock will lead to a default. Even a temporary default would likely have “large systemic effects” on the economy and Treasury finances by disrupting money funds, the repurchase-agreement market and foreign investor willingness to buy the government’s debt, according to JPMorgan Chase & Co.

“This is somewhat unprecedented,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “It just creates all kinds of questions about how do you play it? Nobody thinks they will actually default, but a downgrade could mean maybe higher rates.”

Global equities rallied yesterday after Federal Reserve Chairman Ben S. Bernanke said he’s prepared to provide more stimulus if needed and China’s economic growth beat estimates. The MSCI All-Country World Index of shares in 45 nations advanced 1.1 percent as of 4:31 p.m. in New York yesterday. Moody’s said it was reviewing the U.S. rating at 5 p.m. The equity index slumped 3.4 percent during the prior three days.

Read Article Here

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s