This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Stocks sell-off
All major U.S. indexes sank Wednesday as investors digested news of the U.S.'s lower credit rating. The Nasdaq Composite fared the worst, sinking 2.17%. Asia-Pacific markets traded lower Thursday for a second straight day. Japan's Nikkei 225 slumped 1.27%, leading losses in the region. One piece of good news: China's service sector activity in July expanded faster than it did in June, according to a Caixin survey.
A bad rating for the Fitch rating
Global markets reacted badly to Fitch Ratings downgrading the U.S.'s long-term credit rating — but experts say there's nothing to worry about. JPMorgan Chase CEO Jamie Dimon described it as "ridiculous." Former U.S. Treasury Secretary Larry Summers called described the move as "bizarre and inept." Allianz chief economic advisor Mohamed El-Erian said he was "perplexed."
Job woes in China
New graduates in China are still securing jobs — eventually — but those jobs might not pay well or match their field of study, according to CNBC interviews with six graduates and students. But with China's unemployment rate for youths between aged 16 to 24 hit 21.3% in June, a record high, graduates don't have the luxury of being picky.
Qualcomm struggles
Qualcomm shares sank almost 7% in extended training after the firm gave a weak forecast for the fourth quarter. Additionally, the chipmaker's adjusted revenue of $8.44 billion for the quarter ended June 25 missed revenue expectations, while its net income plunged 52% from $3.73 billion a year earlier to $1.8 billion. The slump in the smartphone industry's really hurting Qualcomm.
[PRO] S&P 500(0)
Fitch Ratings may have lost confidence in the U.S.'s creditworthiness, but analysts are still bullish on the stock market. One told CNBC that he believes the S&P 500 can hit 5,000 by the end of the year, an increase of around 10% from the S&P's close Wednesday. It's a "realistic, not frothy" forecast, he said, and named stocks to buy.
The bottom line
What a difference an "A" makes. Fitch's downgrade of the U.S.'s credit rating from AAA to AA+ sparked a sell-off in markets globally.
In the U.S., the S&P 500 retreated 1.38%, the Dow Jones Industrial Average lost 0.98% and the Nasdaq Composite tumbled 2.17%. The S&P broke a 47-session streak of days without losing more than 1%, the longest in more than three years, while the Nasdaq had its worst day since February.
Meanwhile, the yield on the 10-year Treasury added around 5 basis points to hit 4.09%, the highest since November. News that the U.S. Treasury Department will sell $103 billion of Treasurys next week also put upward pressure on yields.
The higher cost of borrowing meant that rate-sensitive technology stocks tumbled the most. Nvidia plummeted 4.81%, while Amazon, Alphabet and Microsoft sank more than 2%.
Despite the markets' losses, economists aren't concerned about the long-term impact of the Fitch downgrade — if any. U.S. Treasury Secretary Janet Yellen dismissed Fitch's decision, saying its "flawed assessment is based on outdated data." That opinion's echoed by Goldman Sachs chief political economist Alec Philips, who wrote "the downgrade does not reflect new information or a major difference of opinion about the fiscal outlook."
The Fitch-induced sell-off might even be a "constructive rotation," in the words of Jay Woods, chief global strategist at Freedom Capital Markets.
"There is money still being put to work," he said. "There's no rush to the exits right now. It's just a headline that's given us fuel to finally move some chips around a little bit."
After all, the overall U.S. economy still looks healthy. Consumers and businesses are strong as unemployment remains low, propping up healthy balance sheets, Jamie Dimon told CNBC.
What a different an "A" makes — but perhaps twenty-four little hours later, there'll be sun again where there used to be rain.
