by David French and Bansari Mayur Kamdar

(Reuters) – The New York Stock Exchange ended lower on Tuesday, recording its fifth session in the red – out of six – since the start of August, as Moody’s decision to downgrade its rating by several banks has revived fears about the health of the sector and that of the economy.

The Dow Jones index fell 0.45%, or 158.64 points, to 35,314.49 points.

The broader S&P-500 lost 19.06 points, or 0.42%, to 4,499.38 points.

The Nasdaq Composite fell for its part by 110.07 points (0.79%) to 13,884.32 points.

Moody’s announced on Monday evening that it was downgrading the credit ratings of ten small and medium-sized banks and placed six industry giants on review, including Bank of New York Mellon, US Bancorp, State Street and Truist Financial, which could also see their ratings. be degraded.

The rating agency warned of growing risks to sector profitability, citing funding risks and declining profitability.

The move came as the market gradually regained confidence in US banks after the failure earlier this year of three regional banks including Silicon Valley Bank sent shock waves through the financial system.

It illustrates the fragility of investor confidence in banks: the sector has lost 2.5% since the start of the year, while the S&P-500 has risen 17.2% over the same period. It fell again, by 1.1%, on Tuesday.

Goldman Sachs and Bank of America fell around 1.9%.

“Anytime the backbone of the US financial system is under scrutiny, it causes people to pause,” said Brandon Pizzurro, director of public investments at Guidestone Capital Management.

“The markets are slowly digesting this… Maybe we will have high interest rates for a longer duration,” he said.

Ahead of Thursday’s release of US inflation data, Wall Street on Monday rebounded after a week that was the worst since last March for the S&P-500 and the Nasdaq.

Concerns about a possible continuation of monetary tightening by the US Federal Reserve were mitigated by comments from Philadelphia Fed President Patrick Harker, who said that now may be the time for the central bank to no longer change the interest rates, barring a sudden shift in economic data.

Eight of the eleven major sectors of the S&P-500 ended the session lower. Falling early in the day, the energy sector reversed the trend and ended up 0.5%, following the movement of oil prices.

Side values, among the movements to note, the laboratories recorded gains after Novo Nordisk indicated that its drug against obesity, Wegovy, limited the risks of cardiovascular accident.

Eli Lilly jumped 14.9% to a record close, following the release of strong quarterly results.

United Parcel Service fell 0.9% after lowering its full-year revenue forecast.

( Jean Terzian)

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