According to the CS Monitor, on the day of the credit rating drop stocks will lose 1% of their value. This is based on the performance of other countries and more than likely Japan, countries that have fallen out of an AAA rating. On the other hand, the credit rating drop will occur in the USA which is the economic center of the globe. So we are going into uncharted waters. If stocks lose 1% of their value in a day, we can live with that, but since when has this type of thing been predictable. The short answer is never.
Regardless the CS Monitor is trying to prep us for a soft fall. This is a feel good article. Its always a good idea to get different points of view.
CS Monitor: What happens if US credit rating drops? Other countries offer clues.
...a slightly lower credit score doesn't necessarily push interest rates dramatically higher.
The rise in borrowing costs can cause stock prices to fall (often about 1 percent on the day of a downgrade, according to Goldman Sachs). A downgrade could also have similar negative ripple effects for other credit ratings (such as some municipal bonds), for the foreign-exchange value of the US dollar, and economic growth.
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