SMCI Wall Street Strategists React to Moody's US Credit RatingCut
Eric Beiley, executive managing director of vealth management at Steward Partners:
"This is a warning sign. The US stock
market is about to hit a ceiling after a much welcomed rally. A credit-rating downgrade by Moody's may end up spurring some profit taking by money managers after a massive run for equities the past month."
Ivan Feinseth, chief investment officer at
Tigress Financial Partners:
"US Treasury bonds are viewed as the safest investments in the world. When America's credit rating gets downgraded, the reverberations may potentially be more negative for other countries' sovereign debt because the US is the benchmark. It remains to be seen how this will affect equity markets in the coming weeks, but there may be caution following the strong stock gains recently."
Dave Mazza, chief executive officer of Roundhill Investments:
"While Moody's finally made it official, markets have likely seen a diminished US credit profile coming for some time.
Unlike the shock of S&P's August 2011 downgrade, this downgrade lands in a market already wary of fiscal dysfunction and tariff risk - meaning the impact on stocks may be more muted than initial headlines suggest."
Kim Forrest, chief investment officer at
Bokeh Capital Partners LLC:
"This is not the first time the US has been downgraded. I think this is an alarm bell. While I understand futures are probably wonky, we'll see what happens. Because none of this is news to informed investors. Especially the most important section that we're talking about when we're talking about debt, which is the bond investor. They're well aware."
Keith Lerner, co-chief investment officer at
Truist Advisory Services:
"I don't think this is a game changer but does provide an excuse for investors to take a little bit of profits. It does, however, highlight the potential rise in deficits and will put more focus on that with the current discussions around the extension of the tax bill."
Max Gokhman, deputy chief investment officer at Franklin Templeton Investment Solutions:
"A Treasury downgrade is unsurprising amid unrelenting unfunded fiscal largesse that's only set to accelerate with plans currently in Congress. Moreover, debt servicing costs will continue creeping higher as large investors, both sovereign and institutional, start gradually swapping Treasuries for other safe haven assets. This, unfortunately, can create a dangerous bear steepener spiral for US yields, further downward pressure on the greenback, and reduce the attractiveness of US equities."
Michael O'Rourke, chief market strategist at JonesTrading:
"I expect the equity market will experience a round of profit taking after the strong rebound that occurred. Back in 2011 when S&P downgraded the USA, Treasuries initially sold off but then a haven bid emerged and they rallied."
BLOOMBERG
