Business

Market Recap: Stocks Rally, But Fitch Cuts U.S. Outlook to ‘Negative’

Markets closed up on Wall Street today:

  • Dow +2.59 percent
  • S&P +2.92 percent
  • Nasdaq +3.52 percent
  • Oil +1.20 percent
  • Gold +1.62 percent

On the commodities front:

  • Oil (NYSE:USO) climbed to $97.93 a barrel
  • Gold (NYSE:GLD) went up to $1,715.90 an ounce
  • Silver (NYSE:SLV) rose 3.39 percent to settle at $32.15

(Related: Did Households Reduce Debt in Anticipation of Holiday Shopping Binge?)

Today’s markets were up because:

1) Europe: Markets rallied today on hopes that euro-zone leaders will stitch together a new fiscal union meant to stabilize European Union. Investors hope the plan, being pushed by French Prime Minister Nicolas Sarkozy, with German Chancellor Angela Merkel in tow, will open the way for the European Central Bank to bail out Italy and Spain.

2) Consumer spending: Reports of good Black Friday weekend sales contributed to today’s broad rally. Major retailers reported record sales of $52.4 billion over Black Friday weekend — up 16 percent from last year — according to a survey by the National Retail Federation released Sunday.

Retailers such as Wal-Mart, Home Depot, Best Buy, Macy’s, and Saks were trading higher today on the news.

3) Banks: As is the case with most broad rallies, the financial sector was the biggest beneficiary. Investors seem to have been left unfazed by a report today exposing the biggest financial firms’ reliance on the Federal Reserve’s bailout program, as the country’s six biggest banks—Morgan Stanley, Citigroup, Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo—were all trading higher, though they reportedly borrowed $460 billion from the Fed just to survive the crisis.

However, despite these gains in the markets, there is some bad news.

“Fitch has come out and affirmed the US credit rating as AAA, but moved the outlook down to ‘negative’ from ‘stable,’” writes Mark Gongloff of the Wall Street Journal.

What does this mean? It means that the U.S. now has more than a 50 percent chance that it will be downgraded again in the next two years.

But why did Fitch change the outlook to “negative”?

The Negative Outlook reflects Fitch’s declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. ‘AAA’ sovereign rating will be forthcoming following failure of the Congressional Joint Select Committee on Deficit Reduction [Super Congress] to agree at least $1.2 trillion of measures to cut the federal budget deficit over the next 10 years as mandated under the Budget Control Act passed in August…

Translation: the Super Congress failed to accomplish anything and now the credit ratings agencies might toy with America’s credit ratings . . . again.

Thank you, Washington, D.C.

Remember what happened last time the U.S. was downgraded? One can only imagine how well it will go over if it happens a second time within a 3-year period.

[Editor's note: portions of the above are a cross post that originally appeared on Wall St. Cheat Sheet.]

Comments (26)

  • johnlee
    Posted on November 29, 2011 at 12:49am

    MONEY spent last Friday,34% will be paid back. Now the banks are going to hollar! It’s now “show time” If I knew this and the and the banks did not, Some body is too educated.

    Report Post »  
  • paulusmaximus
    Posted on November 28, 2011 at 8:34pm

    Tomorrow []
    \/ next day[]
    \/

    Report Post » paulusmaximus  
  • lel2007
    Posted on November 28, 2011 at 8:21pm

    Maybe Fitch knows the BILL has to be paid or INVESTORS WILL LOSE ALL. America is operating on a credit card. The poopies will hit the fan really soon.

    Report Post » lel2007  
    • johnlee
      Posted on November 29, 2011 at 12:42am

      Money spent last Friday, 37% will be paid . Now the banks are going to hollar. It is now Show Time! You have been warned.

      Report Post »  
  • Outlaw_Josey_Wales
    Posted on November 28, 2011 at 7:07pm

    If Obama gets re-elected, U.S. treasuries will be down graded to junk bonds during his second term.

    Report Post » Outlaw_Josey_Wales  
  • opnsrcsurvival
    Posted on November 28, 2011 at 6:44pm

    I guess its all better then. Cancelling the garden for next year and think I will get a bigger house with a huge mortgage…oh and Susie Orman talked me into puttin all my savings into the stock market!

    http://www.opensourcesurvival.com

    Inflation, it‘s what’s for dinner.

    Report Post » opnsrcsurvival  
  • flatbroke
    Posted on November 28, 2011 at 6:39pm

    Hey, its just keeps gettin better and better with obummernomics.

    Report Post » flatbroke  
  • lukerw
    Posted on November 28, 2011 at 6:37pm

    Socialist constantly make bad decision… so why are we (the IMF, Federal Reserve, and US Banks & State Dept)… bailing them out? Are our Socialist (Democrat) Leaders stupid? — Or, is this the begining the Lemming March to Destruction?

    Report Post » lukerw  
  • AxelPhantom
    Posted on November 28, 2011 at 6:32pm

    When the $ goes down in value, the worth of a company with tangible assets goes up as measured in those same (devalued) dollars. The stock market is not a good measure of economic growth.

    Report Post »  
  • Ookspay
    Posted on November 28, 2011 at 6:27pm

    Crackheads will split their rocks into smoke size pieces, and sometimes little chunks fly off onto the floor. After all of the crack has been smoked, they will search on the floor for those tiny bits to fill the pipe. Sometimes, they will even smoke little food crumbs and dirt or whatever else they find on the floor, anything to burn in the pipe.

    Desperation is a tender trap, it gets you every time.

    Report Post » Ookspay  
  • 1casawizard
    Posted on November 28, 2011 at 6:23pm

    The U.S. markets have had wild swings these four years or so, and that ain’t good. There is no stability in the world, and the markets worldwide reflect that. We live in interesting times. We have to get these thugs on the run. Grow one if not a pair, Boehner ! Put the pressure on these crooks. Ya lost ya voice? Next November the tsunami will hit. The water is already receding from the shore.

    Report Post » 1casawizard  
  • Anamah
    Posted on November 28, 2011 at 6:22pm

    Thanks Democratic Party!!! It is time for you to stop destroying our economy.
    STOP NOW HYPOCRITES LEFTIST, BEFORE ELECTIONS!!!
    You are hurting the people… real people!!!

    Report Post »  
    • Shasta
      Posted on November 28, 2011 at 6:31pm

      And yet Obummer and his party are doubling down. And none of this compares to what the Fed is doing to us. And don’t tell me that the Fed is independent and does not report to the administration.

      Report Post » Shasta  
  • MinutemanOnTheBorder
    Posted on November 28, 2011 at 6:17pm

    Border ops organizing now. Your help needed. http://www.americanborder.blogspot.com for info.

    Report Post » MinutemanOnTheBorder  
    • Ookspay
      Posted on November 28, 2011 at 6:34pm

      Why not just make it easier for Holder and the DOJ and just drive yourself straight to the FEMA camp? I won’t sign up, but I will donate to your legal defense fund.

      Report Post » Ookspay  
    • MidWestMom
      Posted on November 28, 2011 at 7:01pm

      @Ookspay

      my thoughts exactly. Like I’ve said before, there‘s no need to tell everyone what you have or what you’re doing.

      Report Post »  
  • GeneTracy
    Posted on November 28, 2011 at 6:16pm

    Spending beyond your means,maxing out your credit card,what happens to consumers seems to be the likely scenario that will happen to this country too.Down grade from AAA seems to be the least of our problems.

    Report Post » GeneTracy  
  • YoungBloodNews
    Posted on November 28, 2011 at 6:12pm

    The market is a shame.

    Those ‘Strong’ sales should show you how hard up people really are, when battling each other like animals so they can get their kid a Christmas gift.

    Report Post » YoungBloodNews  
    • YoungBloodNews
      Posted on November 28, 2011 at 6:15pm

      Oh and Fitch better watch itself, an SEC investigation may be in their future haha

      Report Post » YoungBloodNews  
  • Ookspay
    Posted on November 28, 2011 at 6:10pm

    It has been said that an engine runs really strong right before it siezes up…

    Report Post » Ookspay  
    • 1casawizard
      Posted on November 28, 2011 at 6:35pm

      These are two different things. Mechanical stuff you can analyze and make a determination the chain of events which caused the demise. Whereas a bunch of people whom you can’t predict are buying and selling like day traders on whims. Close but no cigar, ookspay. TaxeddamnedEnoughAlready.

      Report Post » 1casawizard  
    • Ookspay
      Posted on November 28, 2011 at 7:00pm

      Entropy applies to everything…

      Report Post » Ookspay  
  • Psychosis
    Posted on November 28, 2011 at 6:09pm

    even if they force spending cuts thru sequester, WE WILL STILL SPEND MORE MONEY NEXT YR THAN WE SPENT THIS YR

    in my world , that does not translate to a spending CUT so this whole argument is bumpkiss

    Report Post » Psychosis  
    • Shasta
      Posted on November 28, 2011 at 6:33pm

      Not to mention that the sequester will trash our military in a world that gets more dangerous by the day. Thanks libs

      Report Post » Shasta  

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love