Moody's Investors Service said it had confirmed the United States' triple-A rating but assigned it a negative outlook after lawmakers passed a deal to raise the U.S. borrowing limit and reduce the deficit.
OLIVER PURSCHE, PRESIDENT AT GARY GOLDBERG FINANCIAL SERVICES IN SUFFERN, NEW YORK:
From our perspective they (the ratings agencies) have lost a significant amount of credibility, not just over the past few months but over the past few years. We are not putting any weight on it and institutional investors as a whole are not going to put a whole lot of weight on that kind of statement. However, putting in context of the all events and the overall nervousness and discontent that is going on in the markets right now I do expect there to be a short-term impact to the downside.
QUINCY KROSBY, MARKET STRATEGIST AT PRUDENTIAL FINANCIAL IN NEWARK, NEW JERSEY:
Because it had been discussed as a possibility, I think the market was ready for this. The market is now much more focused on the employment number on Friday morning and economic fundamentals and how deep is this soft patch. The U.S. market is focused in Europe, the weakness in Europe and on Friday's number.
That had been very much talked about in the market, the negative outlook, that if we were going to be triple-A there was going to be a negative outlook. the market had already factored that in.
If S&P doesn't downgrade, I'm sure there will be a negative outlook as well. The fact that S&P said they were misinterpreted is indicative of S&P wanting more flexibility, probably not wanting to downgrade. Many believed S&P had put themselves in a corner. But by saying there was a miscommunication they were trying to give themselves some flexibility.
STEVE BLITZ, SENIOR ECONOMIST, ITG, NEW YORK
If react at all it will be favorable. I think the negative is just their way of trying to keep a little bit of 'feet to the fire' to say that what they did was fine but not enough.
And I think also they recognize the abyss they would be creating if they did lower the rating. Because if they did, they would have to be prepared to downgrade the whole U.S. system by extension and I don't think they were prepared to do that. This is a face-saving move for them, while maintaining a bit of 'feet to the fire.'
JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO SECURITIES, CHARLOTTE, NORTH CAROLINA:
This is unsurprising and pretty consistent with what was expected. They are simply saying they are waiting to see what develops with the new deficit budget commission. It is certainly reasonable given the U.S.'s fiscal position. Now that we are passed the deficit issue, the fiscal issues over the long run will be the story. We do not have tax revenues to meet the spending committed, especially the tax entitlements. Overall this is not a surprise.
KIM RUPERT, MANAGING DIRECTOR OF GLOBAL FIXED INCOME ANALYSIS AT ACTION ECONOMICS LLC IN SAN FRANCISCO
That's consistent with what we saw from Fitch earlier. After they passed the debt limit compromise it still is possible that there is a downgrade given that the budget cuts weren't as large as many had hoped for.
But even with a downgrade most analysts including myself don't expect it to be a major problem for the bond market.
MARKET REACTION: STOCKS: Stock futures were steady. BONDS: Bond futures are currently closed. FOREX: The dollar was steady against the Swiss franc.