U.S. stocks fell Tuesday morning after credit rating agency Moody’s cut its ratings of a handful of small and mid-sized banks, and put several of the country’s biggest lenders under review for a downgrade.
The Nasdaq dropped 1.3%, dragged down by big tech and tumbling chip stocks, while the S&P 500 lost 1%. The Dow Jones Industrial Average fell 0.9%.
Moody’s downgraded the credit of 10 small banks, including M&T Bank Corp. (MTB), Webster Financial (WBS), and BOK Financial (BOKF), citing rising funding costs and exposure to commercial real estate as two factors contributing to its decision. The agency also put Bank of New York Mellon (BK), U.S. Bancorp (USB), and Truist Financial (TFC) on its list of banks under review for a potential ratings cut. Shares of the iShares U.S. Regional Banks ETF (IAT) fell 3% in premarket trading.
Stocks are also under pressure from data showing Chinese export activity fell in July at its steepest rate in years. Geopolitical tension between the U.S. and China—the world’s two largest economies—has prompted some companies to move some operations out of China and reshuffle their supply chains to lessen their reliance on the country. At the same time, inflation and interest rate hikes have lessened consumer demand globally, dealing a blow to China’s manufacturing industry.
Stocks gained yesterday to bounce back from a losing week. The Dow climbed 1.2%, while the S&P 500 gained 0.9% and the Nasdaq rose 0.6%.
