U.S. stock futures fell Wednesday after the surprise downgrading of the country’s top-tier credit rating by Fitch, while the quarterly corporate earnings season continues.

By 06:30 ET (10:30 GMT), the Dow Futures contract was down 175 points, or 0.5%, S&P 500 Futures traded 32 points, or 0.7%, lower and Nasdaq 100 Futures dropped 160 points, or 1%.

Fitch downgrade hits sentiment
Risk sentiment took a hit after Fitch downgraded the U.S. government’s credit rating to AA+ from AAA late Tuesday, citing likely fiscal deterioration over the next three years and repeated fraught debt ceiling negotiations.

Fitch became the second major rating agency after Standard & Poor’s move to strip the United States of its triple-A rating in 2011, but this decision brought a sharp response from the U.S. government, with Treasury Secretary Janet Yellen calling it “arbitrary and based on outdated data.”

After the initial losses, “markets will likely see it in a similar way (i.e. strictly tied to the debt ceiling standoff) especially in a week full of important data releases and with the next Federal Reserve rate hike hanging in the balance,” said analysts at ING, in a note.

Earnings season continues
The main Wall Street indices suffered a lackluster start to the new month, with the blue chip Dow Jones Industrial Average gaining 70 points, or 0.2%, on Tuesday, while the broad-based S&P 500 fell 0.3% and the tech-heavy Nasdaq Composite dropped 0.4%.

However, strong earnings have largely helped stocks this reporting season, with around 82% of the S&P 500 companies that have reported posting positive surprises, according to FactSet data.

Pharmacy chain and health provider CVS Health (NYSE:CVS), fast food corporation Yum! Brands (NYSE:YUM) and health insurer Humana (NYSE:HUM) are set to report earnings before the open Wednesday, while chipmaker Qualcomm (NASDAQ:QCOM) and website platform Shopify (NYSE:SHOP) are scheduled after the close.

Elsewhere, Advanced Micro Devices (NASDAQ:AMD) stock rose premarket after the chipmaker forecast that the release of its artificial intelligence chips will drive up its annual results.

Starbucks (NASDAQ:SBUX) stock fell premarket after its global comparable sales missed estimates, as demand for the Frappuccino maker’s drinks and food showed signs of slowing in North America.

More labor data due for release
Turning to economic data, the July ADP jobs report is due for release before the open, and investors will be looking for clues ahead of Friday’s official jobs report.

The Fed won’t meet to decide on rates again until September, and Chair Jerome Powell pointed out last week the importance of upcoming data in helping the policymakers decide upon the future path of interest rates.

Crude rises after U.S. inventories slump
Oil prices rose Wednesday, near to their highest levels since April, after industry data pointed to a hefty fall in U.S. inventories, indicating robust demand from the world’s biggest fuel consumer.

Data from the American Petroleum Institute, released on Tuesday, showed that U.S. crude inventories shrank by 15.4 million barrels in the week to July 28, the largest draw seen in data stretching back to 1982.

Official data, from the Energy Information Administration, are due later in this session, for confirmation.

By 06:30 ET, the U.S. crude traded 0.6% higher at $81.84 a barrel, while the Brent contract climbed 0.5% to $85.33.

Additionally, gold futures rose 0.4% to $1,986.70/oz, while EUR/USD traded 0.1% lower at 1.0972.