S&P Cuts Its Outlook on American Debt; Stocks Fell

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Context
The ratings group Standard and Poor’s said on Monday that the US might lose its status as the most secure economy in the world if officials fail to reduce the country’s almost $14.3 trillion debt. S&P altered its “stable” outlook on the US to “negative” and warned that the federal government might lose its AAA rating if lawmakers don’t bring spending in proportion to revenues. Stock prices went down almost 2% in the hours following the release of the report, before finishing the day down around 1%. The Treasury and dollar also slid after the report’s release, but recovered later in the day.

 

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