Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 14, 2025. REUTERS/Brendan McDermid
Brendan Mcdermid | Reuters
Stock futures fell Sunday evening as investors responded to Moody’s downgrade of the U.S.’ credit rating.
Futures tied to the Dow Jones Industrial Average dropped 308 points points, or 0.8%. S&P 500 futures pulled back 0.8%, while Nasdaq 100 futures lost 0.9%.
Moody’s on Friday bumped the country’s rating down by one notch to Aa1 from Aaa, bringing the agency in line with its peers. The firm cited the financing challenges tied to the federal government’s growing budget deficit and the ramifications of rolling over existing U.S. debts in a period of high borrowing costs.
The debt downgrade could pressure bond prices and raise yields at a time when the economy is already under pressure from President Donald Trump’s unfolding tariff policy.
“The fundamental factor of less foreign demand for them and the growing size of the pile of debt that needs to be constantly refinanced is not going to change,” said Peter Boockvar, chief investment officer at Bleakley Financial Group, of the U.S. rating change. Moody’s downgrade “is symbolic in the sense that here’s a major rating agency that’s calling out that the U.S. has strained debts and deficits.”
The downgrade comes after a winning week on Wall Street as investors cheered the White House’s deal with China to temporarily slash levies. The agreement was seen as a breakthrough for global trade after Trump’s initial plan for broad and steep import taxes was unveiled last month.
The technology-heavy Nasdaq Composite led the way, surging more than 7%. The broad S&P 500 jumped over 5% and posted a five-day winning streak.
The blue-chip Dow rallied more than 3% last week. Friday’s gain of over 300 points pushed the 30-stock average into positive territory for 2025.
Investors on Monday will monitor speeches from U.S. central bank officials such as Atlanta Federal Reserve President Raphael Bostic, New York Fed President John Williams and Dallas Fed President Lorie Logan scheduled throughout the day. Leading indicators data is due in the morning.