What does Moody's downgrade mean for markets?

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Moody's downgraded ten US banks on Monday night and placed the credit ratings of another six institutions under review. This indicates that the agency may also downgrade these institutions in the future.

Investors say that, while the Moody's rating downgrade wasn't revolutionary, it was a reminder of the challenges that still lie ahead for the economy and the markets.

After Moody's announcement, bank stocks and the market as a whole fell. The Dow Jones Industrial Average index dropped 159 points or 0.5%. The S&P 500 fell 0.4%, and the Nasdaq Composite dropped 0.8%.

JPMorgan Chase shares (JPM) dropped 0.6%. Wells Fargo's (WFC), declined by 1.3%, and Goldman Sachs fell 2.1%. The SPDR Regional Banking Exchange-Traded Fund, which tracks small and midsized bank stocks, fell 1.3%.

BNY Mellon is one of the banks that will be reviewed by the credit agency. Other banks include Northern Trust, State Street Bank, Cullen/Frost Bankers and Truist Financial.

Moody's has downgraded Commerce Bank (BOK Financial), M&T Bank (Old National Bank), Prosperity Bank (Amarillo National Bank), Webster Financial and Pinnacle Financial.

Moody's stated that the agency's actions are a reflection of 'ongoing pressures in the US banking industry, including increased funding and regulatory capital weakness'.

Credit rating agency changed outlook from'stable to 'negative for PNC Financial Services. Capital One Financial, Citizens Financial Fifth Third Bank Huntington Bank Regions Financial Cadence Bank FNB Corp Simmons First National Ally Financial Bank OZK.

Why is that important? The downgrades follow the collapses in March of Silicon Valley Bank, and Signature Bank. This raised concerns that tightening credit could slow down economic growth and trigger a recession.

Wall Street has breathed a collective sigh in recent months, after the Federal Reserve announced that the banking industry is stable. Regional banks also noted that deposits have stabilised.

Investors are also becoming more optimistic that the Fed will end its cycle of rate hikes soon and that the economy can avoid a downturn. In recent weeks, economic data has been cooler and a slower pace of growth is apparent.

Banks tightened their lending standards and made it more difficult for businesses and households to borrow money, putting pressure on economic growth.

Kara Murphy, Chief Investment Officer at Kestra Investment Management, said: 'Investors were happy to ignore the tightening of credit standards, and now this issue is back in the spotlight.

Will the selling last? Investors say that Wall Street may have used Moody's downgrades to sell as an excuse, similar to when Fitch downgraded US sovereign credit ratings last week.

Christopher Marinac said that the downgrades by Moody's did not tell investors anything different.

According to Marinac, this sell-off is unlikely to last more than a few days.

Wall Street firms fined $549 Million for using WhatsApp, other channels

Wells Fargo was one of a number Wall Street firms to admit Tuesday that they used WhatsApp, Signal, and other messaging platforms in violation of federal records requirements.

Matt Egan, my colleague, reported that the Securities and Exchange Commission announced that Wall Street firms had admitted wrongdoing and agreed to pay fines totaling $289 millions.

The SEC stated that its investigation uncovered a 'pervasive' and 'longstanding' 'off-channel communication' at Wells Fargo. BNP Paribas. SG Americas. BMO Capital Markets. Mizuho Securities. Houlihan Lokey. Moelis. Wedbush.

According to regulators these firms admit that their employees communicate about business via WhatsApp, iMessage and Signal on their personal devices.

The SEC stated that the firms had violated federal securities law by failing to preserve or maintain the'substantial' majority of these communications.

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Americans' credit card debt reaches a record of $1 trillion

Alicia Wallace, my colleague, has reported that the level of credit card debt in America just reached a new but unwelcome milestone.

According to the Federal Reserve Bank of New York, the total has surpassed $1 trillion for the first time.

According to the latest Quarterly Report of the New York Fed on Household Credit and Debt, the balances on credit cards increased by nearly $46,000 billion or $45 billion in the second quarter.

The report revealed that rising credit card and auto loan debt helped drive household debt up by 1% to $17.06 trillion in the third quarter.

The total household debt has risen by $2.9 trillion in the year before the pandemic. New York Fed debt balances do not adjust for inflation.