An analyst at Fitch Ratings warned that U.S. banks, including JPMorgan Chase, could be downgraded if the agency further cuts its assessment of the operating environment for the industry, according to a report from CNBC on Tuesday.
In June, Fitch lowered the score of the U.S. banking industry’s “operating environment” to AA- from AA, citing pressure on the country’s credit rating, gaps in regulatory framework and uncertainty about the future trajectory of interest rate hikes.
“Interest rates have begun to reverse a long-run decline since the early 1980s and banks will be operating in an environment of higher rates for an extended period, pressuring deposit levels and increasing funding costs,” Fitch had said in June.
Another one-notch downgrade, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, analyst Chris Wolfe told CNBC.
Lenders were rocked earlier this month after Fitch’s peer Moody’s downgraded 10 mid-sized U.S. banks and warned it may cut ratings of several others.
Shares of U.S. banks dropped after a Fitch Ratings analyst told CNBC that the agency could downgrade several lenders. Shares of JPMorgan Chase, Citigroup, and Bank of America were lower by nearly 2%.
Wall Street stocks fell early today following weak Chinese economic data that offset better-than-expected US retail sales. Data from July showed a slowing in China’s retail spending and industrial production growth, while Beijing stopped publishing numbers on its rising youth unemployment rate.
Meanwhile, US retail sales advanced 0.7 percent to $696.4 billion last month, up from a revised 0.3 percent bump in June, in a sign that the strong labor market continues to support consumption.
The Dow Jones Industrial Average was down 0.7 percent at 35,074.70. The broad-based S&P 500 dropped 0.6 percent to 4,461.16, while the tech-rich Nasdaq Composite Index shed 0.5 percent to 13,715.73. (With Agency Inputs)
