CNBC Daily Open: After a winning week for stocks, Moody’s downgrade of U.S.’ credit rating poses a new challenge

CNBC Daily Open: After a winning week for stocks, Moody’s downgrade of U.S.’ credit rating poses a new challenge


The statue of former Treasury Secretary Albert Gallatin stands in front of the north wing of the U.S. Treasury Department headquarters building on April 24, 2025, in Washington, DC, U.S.

J. David Ake | Getty Images News | Getty Images

U.S. stocks popped last week on the back of a trade truce between America and China, in which they mutually agreed to cut tariffs for 90 days. Technology stocks soared, with Tesla and Nvidia leading the pack. Absent new developments on the tariff front, however, it’s unclear if this buoyant sentiment can last.

For one, the U.S.’ credit rating was downgraded by Moody’s Ratings to the second highest. This means investors could demand higher returns for U.S. Treasurys amid their ostensibly lower trustworthiness. Rising Treasury yields, in turn, could pressure stocks. Even though Moody is merely the latest to join Standard & Poor’s and Fitch Ratings in bumping down the U.S. from the top rating — which did so in 2011 and 2023 respectively — it might send another crack through an already fragile stock market.

Although Nvidia was one of the winners of last week’s rally, it is still contending with chip export restrictions to China and increased scrutiny over its business activities. That’s a big deal because China’s artificial intelligence sector is “not behind” that of the U.S., and will probably reach around $50 billion within three years, according to Nvidia CEO Jensen Huang. Losing out on that market would be a “tremendous loss,” he added.

Whether last week’s rally can be sustained will rely, then, on the headlines that will come from the White House this week.

What you need to know today

Moody’s cuts U.S.’ credit rating
Moody’s Ratings cut the United States’ sovereign credit rating down one notch to Aa1 from Aaa, which is the highest possible, citing the growing burden of financing the federal government’s budget deficit and debt. Treasury Secretary Scott Bessent on Sunday called the downgrade a “lagging indicator,” claiming it reflects conditions during the Biden administration.

China’s retail sales disappoint
Retail sales in China grew 5.1% in April from a year earlier, lower than the 5.5% expected by a Reuters poll and March’s figure of 5.9%, suggesting the spending habits of consumers are still muted. Industrial output rose 6.1% in April on an annual basis — while that slowed from March’s 7.7% jump, it beat estimates of 5.5%, defraying some fears that U.S. tariffs would severely depressing factory activity in China.

Winning week for U.S. stocks
All major U.S. indexes rose Friday. For the week, the S&P 500 surged 5.3% and the Dow Jones Industrial Average climbed 3.4%. The Nasdaq Composite popped 7.2% on the back of strong showings from technology stocks such as Tesla and Nvidia, which jumped 17% and 16% respectively on the week. U.S. futures slipped Sunday evening stateside. Asia-Pacific markets fell Monday. Mainland China’s CSI 300 lost roughly 0.3% on downbeat retail sales figures from Beijing.

Nvidia denies sending chip designs to China
Following a report in the Financial Times that Nvidia is working on a research and development center in Shanghai in light of new U.S. export curbs, the chipmaker told CNBC it is “not sending any GPU designs to China to be modified to comply with export controls.” A source familiar with the matter told CNBC that the company is leasing new space for current employees, but is not sending any IP or GPU designs there.

Biden diagnosed with prostate cancer
Former U.S. President Joe Biden on Friday was diagnosed with an “aggressive” form of prostate cancer, his office said on Friday. “The cancer appears to be hormone-sensitive which allows for effective management,” his office added.

[PRO] China certifies pilotless plane
As companies like Tesla and Alphabet-owned Waymo seek to be the first on the market with driverless cars, one company received certification from China this week to fly pilotless planes. Bank of America says it’s time to buy the firm’s U.S.-listed stock.

And finally…

An H&M store in New York City on Nov. 19, 2024.

Charly Triballeau | AFP | Getty Images

Meet the sustainable fashion startup backed by H&M and Amazon

When Gilberto Loureiro spent summers working in a textile factory as a teenager growing up in Portugal, he discovered that he felt “hate and love” for how clothes were produced.

“I really love the textile industry and problem solving, but I hate this … inspection working and inefficiencies and the waste. It’s really one of the most difficult jobs in the world,” Loureiro told CNBC via video call.

After taking a master’s degree in physics, he co-founded of Smartex, a tech company that uses cameras, vision software and artificial intelligence to spot defects in textiles during their production, and therefore reduce the proportion of fabric going to waste. Loureiro claims the technology has prevented 1 million kilograms of fabric from going to waste in the past three years.



Source

Musk’s xAI scores permit for gas-burning turbines to power Grok supercomputer in Memphis
World

Musk’s xAI scores permit for gas-burning turbines to power Grok supercomputer in Memphis

The Grok logo is being displayed on a smartphone with Xai visible in the background in this photo illustration on April 1, 2024.  Jonathan Raa | Nurphoto | Getty Images Elon Musk’s xAI attained an official permit to power its supercomputer facility in Memphis, Tennessee, using natural gas-burning turbines, according to public records shared by the […]

Read More
35-year-old American moved to Chengdu and lives on $30,000 a year: ‘[It’s] poverty in America, but in China I’m living large’
World

35-year-old American moved to Chengdu and lives on $30,000 a year: ‘[It’s] poverty in America, but in China I’m living large’

In her late 20s, Aleese Lightyear worked in reality TV production and lived in New York City, which she thought was her dream. “At the height of my career in New York, I was probably making $100,000 a year [and] working eight months out of the year, which on paper sounds great, but New York […]

Read More
Trump megabill gives the oil industry everything it wants and ends key support for solar and wind
World

Trump megabill gives the oil industry everything it wants and ends key support for solar and wind

President Donald Trump’s One Big Beautiful Bill Act ends long-standing federal support for solar and wind power, while creating a friendly environment for oil, gas and coal production. The House of Representatives passed Trump’s megabill Thursday ahead of a White House-imposed deadline, after the Senate narrowly approved the controversial legislation Tuesday. Trump has made his […]

Read More