Stocks dove Wednesday after Fitch downgraded the long-term rating for the U.S. and Wall Street assessed the fallout.
The Dow Jones Industrials backtracked 264.45 points to reach noon EDT Wednesday at 35,366.23.
The S&P 500 Index let go of 62.76 points, or 1.4%, to 4,513.97.
The NASDAQ index staggered 336.68 points, or 2.4%, to 13,94 7.97.
Fitch Ratings cut the long-term foreign currency issuer default rating for the U.S. to AA+ from AAA Tuesday night, citing “expected fiscal deterioration over the next three years.”
Chinese tech names JD.com, Alibaba and Baidu fell more than 4% as China proposed limits smartphone use for minors. Mega caps Amazon, Alphabet, Microsoft and Nvidia slumped more than 2%.
On top of that, a busy earnings week carried on. CVS Health rose about 4% after posting strong earnings as it trims costs, while Humana gained after posting lower-than-expected medical costs. Elsewhere, Advanced Micro Devices fell 6.6% despite better-than-expected results.
SolarEdge Technologies tumbled 19% after missing second-quarter revenue expectations.
Earnings season is more than halfway through with results coming in stronger than expected. Of the S&P 500 companies that have reported, about 82% have posted positive surprises. The earnings beats have added to bullish investor sentiment, continuing this year's recovery.
Elsewhere, the latest ADP jobs report showed 324,000 private payrolls added in July. That far exceeded the jobs gains expected by economists polled by Dow Jones, but marked a decrease from June's downwardly revised 455,000.
Prices for the 10-year Treasury tumbled, raising yields to 4.09% from Tuesday's 4.03%. Treasury prices and yields move in opposite directions.
Oil prices dipped $2.11 to $79.26 U.S. a barrel.
Gold prices subtracted $6.60 to $1,972.20 U.S. an ounce.