S&P 500 turns flat after Fitch’s warning; Merck boosts the Dow Jones

Oct. 1 (Reuters) – The S&P 500 slashed its first gains on Friday after Fitch warned political wrangling over the US debt limit could hurt the country’s credit rating, while drugmaker Merck argued the Dow Jones to mark progress in the development of an oral COVID-19 drug.

Fitch said the “debt limit”, referring to the protracted bipartisan talks about raising the spending limit, could put pressure on the United States’ “AAA” rating.

President Joe Biden signed a measure to continue funding the government until December 3, although Democrats and Republicans in Congress continued to fight to raise the debt ceiling beyond $ 28.4 trillion in order to avoid a credit default in the United States.

“It’s unfortunate that Congress is using this as a trading tactic, it’s a bad scenario overall,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

“At the end of the day, foreign creditors might not want to buy US debt and if that happens, rates will go up sharply and if rates go up because people were unwilling to buy treasury bills that would have. a very negative impact on the market. “

Shares of Merck & Co Inc (MRK.N) jumped 8% and were the main boost to the Dow Jones (.DJI) after the company’s investigational oral drug for COVID-19, molnupiravir, took reduced the risk of hospitalization or death for patients at risk of serious illness by approximately 50% in one study. Read more

“The market sees this as a very positive development as it has given people confidence that the reopening will not be derailed despite groundbreaking cases with vaccines,” said Thomas Hayes, managing member of Great Hill Capital LLC in New York City. .

Six of the top 11 S&P sectors advanced early in the session, with economically sensitive energy (.SPNY), industrials (.SPLRCI) and materials (.SPLRCM) increasing the most.

Cruise lines (CCL.N), (RCL.N) and (NCLH.N) jumped more than 3%, while the S&P 1500 Airlines sub-index (.SPCOMAIR) rose 4.2% in the hope for a faster rebound in travel demand.

Wall Street ended sharply lower on Thursday and the S&P 500 recorded its worst month since the start of the global health crisis, after a tumultuous month and quarter ravaged by concerns over COVID-19, inflation fears and budget wrangling in Washington.

The data showed that U.S. consumer spending rose more than expected in August, while the personal consumption expenditure index, a favorite inflation indicator of the Federal Reserve, maintained its upward trend throughout. of the month. Read more

As of 9:58 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 122.89 points, or 0.36%, to 33,966.81, the S&P 500 (.SPX) was down 0.59 point, or 0.01%, to 4,306.95, and the Nasdaq Composite (.IXIC) lost 53.71 points, or 0.37%, to 14,394.88.

Cryptocurrency-related stocks rose as bitcoin rallied after Fed Chairman Jerome Powell said the United States had no plans to ban cryptocurrencies.

Coty Inc (COTY.N) gained 5.7% after agreeing to sell ~ 9% stake in professional beauty company Wella to KKR & Co Inc (KKR.N). Read more

Rising issues outnumbered declines by a 1.49-to-1 ratio on the NYSE and by a 1.17-to-1 ratio on the Nasdaq.

The S&P Index recorded four new 52-week highs and five new lows, while the Nasdaq recorded 20 new highs and 62 new lows.

Report by Devik Jain and Medha Singh in Bengaluru; Editing by Maju Samuel

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