S&P pared its rating on Boeing to A-minus from A and lowered the short-term rating to A-2 from A-1.
"The downgrade reflects the uncertainty over when the 737 MAX will return to service, the risk to the supply chain from the planned production halt, and possible long-term impact to Boeing's competitive position," S&P said in a statement.
Boeing shares were up nearly 1% to $333.86.
S&P also revised its management and governance assessment on the company to fair from satisfactory.
The 737 MAX in March was grounded worldwide following two fatal crashes. On Monday, Boeing said it would halt production of the 737 MAX in January as the plane’s return to flight faces further delays and inventories have built up.
"Boeing's plans to suspend production of the 737 MAX may save some cash in the near term, but it could introduce additional risk into the supply chain," S&P said.
"The company stated it doesn't plan to furlough any workers on the program and will likely have to support some suppliers, so the cash saved from stopping production could be modest."
S&P said that while Boeing is likely to support weaker suppliers, "the longer production is halted, the more likely that some, especially smaller suppliers, could run into liquidity problems or take other actions (such as furloughing employees that will be difficult to rehire in a tight labor market)."
"That will make it difficult for them to support MAX production once it resumes," S&P said. "Furthermore, the supply chain for the MAX is global and very complex. Stopping and restarting could be costly and difficult."
S&P said it could raise Boeing's rating in the next two years if the aircraft manufacturer resumes MAX deliveries and works down the backlog of MAX aircraft built during the grounding.
In addition, Boeing would have to raise production to 57 a month, reduce debt used to support liquidity during the grounding, avoid large order cancellations or a material loss in share in the narrow-body market, and the MAX production halt does not significantly disrupt the supply chain.
The announcement follows a similar action on Wednesday by Moody's, which cut Boeing one level to A3, four levels above speculative grade. The credit-rating company noted the uncertainty surrounding the 737 MAX.