SPX S&P 500 Fell 10% After the Last U.S. Credit Downgrade !!!

Fitch Ratings made a significant move by downgrading the US debt rating on Tuesday, shifting it from the highest AAA rating to AA+. The downgrade was attributed to a "steady deterioration in standards of governance." This decision followed intense negotiations among lawmakers to reach a debt ceiling deal, which posed a risk of the nation's first default.

The S&P 500 experienced a notable decline of 10% within three months after the previous U.S. credit downgrade. The downgrade occurred on August 5, 2011, by Standard & Poor's, one of the major credit rating firms, following another intense debt ceiling battle. The day after the S&P downgrade, the S&P 500 suffered a nearly 7% drop, dubbed "Black Monday." Subsequently, the benchmark index declined by 5.7% that month and an additional 7.2% in September.

Jim Reid, a strategist at Deutsche Bank, emphasized that the 12-year-old news of S&P being the first to downgrade was significant, allowing investors to adjust their perceptions of the world's most important bond market, which was no longer considered pure AAA. Nonetheless, Fitch's recent decision to downgrade remains impactful.

In the current scenario, the U.S. 10-year Treasury yield has risen to 4.15%, the highest since November 2022.

As for my price target for this year, it remains at $4900, as illustrated in the chart provided below:

Looking forward to read your opinion about it!

Trade active:

SPX following the trendline so far!

Trade closed: target reached:

SPX reached $4100 on Oct 27, extremely close to the $4080 price target! So that U.S. Credit Downgrade statistic really worked.