The downgrade follows a change in the outlook on the sovereign in 2023 due to wider fiscal deficit and higher interest payments, and comes as Congress debates tax and spending plans that could deepen the fiscal hole.

Stocks and U.S. government bond prices at first fell sharply early in Monday’s trading, but they trimmed their losses as the day progressed. The S&P 500 went from a loss of 1.1% to a modest gain of 0.2% before drifting through the afternoon.