The market had a rocky day on the last trading day of May as Fitch downgraded Spain’s bonds from an AAA rating to an AA+ rating. Although that is still a good rating and Fitch still considers Spain’s debt to be “stable” the downgrade was enough to throw the U.S. markets into a slump. As a result, the Dow Jones Industrial Average closed at 10,136 with a loss of 122 points erasing some of the gains made on Thursday. The Nasdaq closed down 20.64 points and the S&P 500 was down 13.65. European and Asian markets were mixed while the Euro was up .66%.
Spanish officials were quick to point out that an AA+ rating is still considered high and that the country’s government is dedicated to financial reform, but the loss of confidence by the downgrade combined with existing European debt woes undermined any positive angle that could be conceived of.
Also not helping matters was the news that the municipal debt of three U.S. cities will likely come up 56B to 83B short collectively between now and 2012 and the reported slow down in consumer spending in April.