S&P upgrades US outlook, but investors yawn
NEW YORK - A better outlook for the U.S. government's credit rating did little to impress investors Monday.
The U.S. stock market edged higher in early trading Monday after the Standard & Poor's ratings agency raised its outlook for U.S. government debt and predicted an improving economy.
Stocks rose in the first 15 minutes after trading opened at 9:30 a.m. Eastern Daylight Time, then moved between small gains and losses. By 10 a.m., all the major U.S. indexes were down.
The S&P Ratings Service had downgraded the U.S. government's long-term credit rating in 2011 because of a contentious fight in Congress over raising government spending limits. The downgrade, an embarrassment to the U.S., also sent the stock market into a tailspin. The Dow Jones industrial average plunged 634 points, or more than 5 percent, on the first trading day after the downgrade. The market suffered through big triple-digit swings for the rest of the fall.
On Monday, S&P upgraded its outlook on the U.S. debt rating to "Stable" from "Negative." It said that the U.S. economy has started to improve. The agency cited the budget deal that Congress brokered late last year, which is meant to raise tax revenue and cut government spending.
The Dow Jones industrial average was down 36 points at 15,211, a loss of 0.1 percent, as of 10:15 a.m. The S&P 500 index was down four to 1,639. The Nasdaq composite index was down three to 3,466.
The yield on the 10-year Treasury note rose to 2.20 percent from 2.18 percent late Friday. In commodities trading, the price of crude oil fell 28 cents to $95.75 and gold edged up 30 cents to $1,383 an ounce.
On a day short on U.S. economic news, the S&P upgrade was the center of traders' attention. There were no major government reports on the U.S. economy, and no big companies announced earnings.
Outside the U.S., Japan's Nikkei stock index soared 5 percent after a report that the world's No. 3 economy is growing faster than expected. But there were also reminders that the global economy is far from cured. In the Netherlands, the central bank warned that the government needs to cut spending. Courts in Germany are poised to consider whether Germany is legally allowed to bail out struggling European countries as it's been doing.
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