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S&P Upgrades U.S. Credit Outlook To 'Stable'

Citing improved tax receipts and some steps taken to address the country's long-term budget issues, Standard & Poor's upgraded the United States credit outlook to "stable." As Reuters reports, the credit rating agency said the chance of a downgrade to the country's credit rating is "less than one in three."

Reuters reports:

"The agency raised concerns about the ability of policymakers to tackle long-standing issues due to a deepening of a partisan divide in Washington in the last decade, however.

"'We believe that our current 'AA+' rating already factors in a lesser ability of U.S. elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling,' the agency said in a statement."

Bloomberg reports the markets rallied on the news. Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., told Bloomberg: "It was a quite shocking event for the markets when the U.S. was downgraded to negative, so to have that rating repaired is meaningful. Economic data has been improving gradually and S&P's upgrade is a recognition of that."

The Wall Street Journal explains:

"S&P still maintains an AA-plus rating on the U.S., one notch below the top triple-A rating. S&P was the only major credit ratings firm that stripped the U.S. of its top rating, a move which occurred in August 2011."

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