Fitch Ratings said Tuesday it will keep its rating on U.S. debt at the highest grade, AAA, and issued a “stable” outlook, meaning it expects the rating to stay there.
That’s better than the other two main ratings agencies: Moody’s lists the U.S. debt at AAA but says its outlook is negative. And Standard & Poor’s set off a maelstrom in the stock market last week after it took its rating on the U.S. down to the second-highest grade, AA-plus, for the first time.
The Obama administration welcomed the announcement from Fitch but said it would be important for Congress to take the steps called for in the budget agreement.
“The Treasury Department continues to believe that Treasury securities are AAA investments. Today’s report underscores the importance of Congress taking additional actions to address our long-term fiscal challenges,” Treasury spokesman Anthony Coley said.
Fitch said it decided to keep its rating because the “key pillars” of U.S. creditworthiness remain intact, including its “flexible, diversified and wealthy economy.” It also said the country’s flexibility in monetary policy gives it the ability to absorb economic shocks.
— Associated Press
U.S. automakers rebounded in July to boost factory production by the most since the Japan crisis. But builders broke ground on fewer single-family houses, leaving home construction at depressed levels.
Overall industrial production, which includes output by utilities, mines and factories, rose 0.9 percent last month, the Federal Reserve said Tuesday. That’s the largest gain this year.
Factory output, the biggest component of industrial production, climbed 0.6 percent. The auto industry accounted for nearly all of the factory production gains. Motor vehicles and parts jumped 5.2 percent. Excluding that category, factory output grew only 0.2 percent.
Also driving industrial production higher was an unseasonably hot summer. That led more people to leave their air conditioners running. Utility output jumped 2.8 percent, the most since December. Mining output also increased.
The Commerce Department said builders began work on a seasonally adjusted 604,000 homes last month, a 1.5 percent decrease from June. Single-family homes, which represent 70 percent of home construction, fell 5 percent. Apartment building rose more than 6 percent.
— Associated Press
— Home Depot’s second-quarter net income rose 14 percent as shoppers picked up lawn and garden products and made storm-related repairs during the summer, the company said. It also raised its earnings guidance. The increases stood in contrast to smaller rival Lowe’s, which a day earlier blamed bad weather for its flat second-quarter earnings and cut its revenue forecast.
— Investors who lost billions of dollars in Bernard Madoff’s massive multi-decade fraud are not entitled to recover fake profits that were described to them in phony statements, a federal appeals court said. The 2nd U.S. Circuit Court of Appeals concluded that trustee Irving Picard’s calculation of the investors’ losses was “legally sound” and that a bankruptcy court was correct when it rejected arguments from lawyers for investors who said their clients should receive more than what they initially gave to Madoff.
— Verizon Communications, the telephone company where about 45,000 workers are out on strike, told the employees it would suspend certain benefits at the end of the month if they haven’t returned to their jobs. Workers at two unions that have called strikes will lose basic health insurance, dental, vision and prescription-drug benefits, said Richard Young, a spokesman for the company.
—Allstate is suing Goldman Sachs claiming the broker fraudulently sold it more than $123 million in mortgage-backed securities in 2006 and 2007, before the housing market collapse sent the investments’ value plunging. The insurer claims in a lawsuit filed in New York that the documents Goldman provided at the time “contained untrue statements and omitted material facts” about the mortgages underlying the investments.
— From news services
—8:30 a.m.: Producer price index report.
—Earnings reports: BJ’s Wholesale Club, Staples, Target.
— From news services