2023-08-15 12:49:11 ET
U.S. banks stocks are trending down this morning after Fitch Ratings warned that it may have to downgrade a bunch of them, including JPMorgan Chase & Co ( NYSE: JPM ).
Fitch could go to A+ on U.S. banking industry
The rating agency lowered its score on “ operating environment ” of the country’s banks by one-notch to AA- in June. At the time, it had cited reasons including rates-related uncertainty and pressure on overall rating of the United States.
More importantly, a further downgrade to A+ will make the firm revisit its ratings on over 70 U.S. banks in its coverage, said Chris Wolfe – a Fitch analyst in an exclusive interview with CNBC.
If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions.
Fitch recently lowered its U.S. long-term rating
Note that individual banks can’t command a rating higher than the operational environment of the industry at large. So, if the environment is downgraded to A+, the likes of JPMorgan and the Bank of America Corp ( NYSE: BAC ) will have to go down a notch as well.
And that’s just for the big banks. The weaker lenders in such an event may end up with a non-investment-grade status.
The stock market news arrives only days after Fitch lowered its U.S. long-term rating to AA+ on growing debt and political dysfunction. Peer Moody’s recently trimmed its ratings on a host of U.S. banks as well ( read more ).
The Dow Jones U.S. Banks Index is down more than 2.0% on Tuesday.
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