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US stock futures took a hit on Monday while Treasury yields rose, as Wall Street processed Moody's downgrade of the US credit rating alongside developments in President Trump's tariff salvos.
Dow Jones Industrial Average futures (YM=F) tumbled around 260 points, or 0.6%. Contracts tied to the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) sank 1% and 1.4%, respectively.
Moody’s cut the US government’s long-term credit rating from Aaa to Aa1 late Friday, citing escalating deficits and the increasing burden of refinancing US debt amid elevated interest rates. The downgrade brings Moody’s in line with Fitch and S&P, which previously stripped the US of its top-tier rating.
Stocks took a bearish tone following their recent bullish run, with the bumpy progress of the Republican tax-and-spend bill in high focus. Meanwhile, longer-dated Treasury yields climbed. The benchmark 10-year yield (^TNX) rose to around 4.56%, and the 30-year equivalent (^TYX) broke above 5% — a level not seen since late 2023.
On the tariffs front, Scott Bessent warned countries that their imports will return to facing "Liberation Day" hikes if they don't negotiate deals "in good faith" during the 90-day pause. The Treasury Secretary added that the US is focused on striking deals with 18 "important" trading partners, speaking in a Sunday interview with CNN.
Read more: The latest on Trump's tariffs
Trump himself provided a broadside at US retail giant Walmart (WMT) on social media, urging the company to "eat the tariffs." It represented the latest pushback from the president against companies showing consumers the cost of his economic moves, after a brief tit-for-tat last month with Amazon (AMZN).
This week’s calendar is light on scheduled economic announcements, and the market is monitoring manufacturing data and initial jobless claims.
On the earnings front, with many of the heavy-hitters already reporting for the quarter, attention will shift to key names in retail and tech. Target (TGT), Home Depot (HD), and Workday (WDAY) are all slated to report.
LIVE 8 updates
Novavax stock soars on FDA vaccine approval
Novavax (NVAX) stock shot up more than 16% premarket on Monday after the company finally received FDA approval for its COVID-19 vaccine, though only under some conditions.
The US Food and Drug Administration approved Nuvaxovid for use in older adults and people over 12 years with health conditions that put them at risk from COVID. The vaccine was previously approved for emergency use only.
Novavax's vaccine approval had been called into question after the FDA delayed its approval decision and Health and Human Services Secretary Robert F. Kennedy Jr. expressed skepticism over its efficacy.
Reuters reports:
'Sell America' is back as Moody's pushes 30-year yield to 5%
The yield on 30-year Treasurys rose to the key 5% level early on Monday after Moody's became the last of the major ratings agencies to downgrade US credit.
The move stoked concerns around the growing $36 trillion US deficit, seen by some as a looming debt time-bomb.
Bloomberg reports:
Nvidia stock falls after chipmaker debuts products at Taiwan expo
Wall Street is digesting a stream of announcements from Nvidia CEO Jensen Huang in Taiwan, ranging from development of human-shaped robots to tech that lets customers build custom AI servers.
Shares in the AI chipmaker dropped around 3% in the wake of the news from the Computex Taipei tech expo in Taiwan on Monday.
Yahoo Finance's Daniel Howley reports on the product debuts:
Morgan Stanley says buy any dip in US stocks after Moody's cut
Bloomberg reports:
Investors should buy any dips in US stocks fueled by Friday’s credit rating cut, as the trade truce with China has reduced the odds of a recession, according to Morgan Stanley’s Michael Wilson.
The strategist sees a greater chance of a pullback in equities after the downgrade by Moody’s Ratings pushed 10-year bond yields (^TNX) above the key 4.5% level. However, “we would be buyers of such a dip,” Wilson wrote in a note.
S&P 500 futures (ES=F) slid 1.2% on Monday following the debt downgrade, which Moody’s said was in response to a ballooning budget deficit that showed little sign of narrowing. The move has reignited worries about whether US assets are still popular at a time of lingering global trade uncertainty.
Good morning. Here's what's happening today.
Walmart stock slips as Trump takes aim over tariff-fueled price hikes
Shares of Walmart slipped in premarket trading after President Trump took the retailer to task over its looming tariff-fueled price hikes.
"Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, 'EAT THE TARIFFS,' and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!," Trump said in a post on Truth Social on Saturday.
His Treasury Secretary, Scott Bessent, meanwhile played down concerns about a tariff boost to inflation by saying Walmart's price-hike warning was a "worst-case scenario".
Yahoo Finance's Brian Sozzi reports:
Asian markets slip on Chinese market data and US credit downgrade
Asian equities declined Monday as investors reacted to weaker-than-expected Chinese economic data and fresh concerns over US credit risk.
China’s National Bureau of Statistics reported April industrial output rose 6.1% year-over-year, slowing from 7.7% in March but beating forecasts. Retail sales climbed 5.1%, below the expected 5.5% and down from March’s 5.9%.
Markets across the region responded negatively as Hong Kong’s Hang Seng (^HSI) dropped 0.5%, while China’s CSI 300 (000821.SS) lost 0.5%.
Japan’s Nikkei 225 (^N225) declined 0.7% as South Korea’s Kospi (^KS11) fell 1.1%. Australia’s S&P/ASX 200 (^AXJO) dipped 0.6%.
The decline in Chinese economic data's impact on the region was compounded by Moody’s recent downgrade of the US credit outlook, which weighed on investor sentiment.
Gold bounces after Moody's US credit downgrade pushes haven demand
Gold (GC=F) recovered from a six-week decline as Moody's downgrade of the US credit rating pushed investors toward haven assets.
Bloomberg reports:
