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This article originally appeared on .

August is usually for the stock market.

But Fitch shattered any sense of summer calm last night when it , in what could end up being a massive blow to President Joe Biden’s economic track record.

Here’s everything you need to know about the ratings agency’s shock move.

What happened?

On Tuesday, Fitch from the top-tier AAA score to AA+.

That means it believes the government is now less likely to be able to repay its debts, only two months after Biden and House Republicans reached an to avoid a catastrophic default.

Fitch said the last-minute debt-ceiling deal after months of shutdown had failed to convince it that Congress would be able to avert future calamities.

“There has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” it said in a statement.

The agency added that it’s also concerned about rising government debts and the long-term health of programs such as Social Security and Medicare.

How are stocks responding?

As debt-ceiling negotiations dragged on earlier this year, if the government ever failed to repay its debts — so even a downgrade is bad news for the market.

US stocks looked set to slump at Wednesday’s opening bell, with and futures each down over 1% at 5 a.m. ET, according to data from CME Group.

The was on pace to slip 0.8%, while flagship indexes in Europe and Asia also traded lower.

There was better news for bonds and currencies, though — with and holding steady and an index that tracks the strength of the roughly flat.

Has this ever happened before?

Yes, once.

S&P Global, another “Big Three” credit-ratings agency, slashed the US government’s debt-repayment score in 2011 — and that also fueled a sell-off in riskier assets and a bounce for Treasurys as investors sought out safe havens.

What’s Wall Street’s reaction?

Fitch’s downgrade is a fresh source of uncertainty for investors, who up until late Tuesday had been enjoying a in which both the and had racked up massive gains.

“When the debt of the world’s largest economy is seen as lower quality, it will naturally trouble investors and make them rethink their portfolio,” Laith Khalaf, AJ Bell’s head of investment analysis, said.

“It also might surprise some people given how ,” he added, referring to the fact that growth surged and the job market held firm over the second quarter of 2023.

Meanwhile, Biden administration officials and top economists slammed Fitch’s move.

Treasury Secretary Janet Yellen said the decision was “arbitrary and based on outdated data,” while one of her predecessors, Larry Summers, called the downgrade “.”