Stock futures tumbled on Monday as a downgrade of the U.S.’ credit rating by Moody’s caused Treasury yields to spike.
Futures tied to the Dow Jones Industrial Average dropped 292 points, or 0.7%. S&P 500 futures pulled back 1.1%, while Nasdaq-100 futures lost 1.5%.
Moody’s on Friday after the bell 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 pressured bond prices, sending yields higher, at a time when the economy is already under pressure from President Donald Trump’s unfolding tariff policy. The 30-year U.S. bond yield traded above 5% on Monday and the 10-year yield topped 4.5%, levels that pressured equity markets last month and helped cause Trump to back off his stiffest tariffs. Loans for houses, cars and credit cards track these rates.
“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.”
Leading the premarket losses Monday were key tech stocks that would be hurt the most if rising yields slowed the economy and hurt investors’ risk appetites. Palantir was off by 4% on Monday. Tesla shed 3%. Nvidia was off by more than 2%.
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 last week, 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.
Traders now see more trade deals as key to keeping the stock market comeback going, if yields don’t scare away investors first.
30-year Treasury yield tops 5% after U.S. debt downgrade
The U.S. 30-year Treasury bond yield topped 5% on Monday after Moody’s slashed its rating on U.S. credit.
The yield sat at 5.023%, up more than 12 basis points on the day. Other Treasurys also lost value, pushing their yields higher. The benchmark 10-year Treasury note yield traded at 4.546%, while the 2-year yield hovered just above 4%.
— Fred Imbert
U.K. bond yields rise after UK-EU deal
British government bond yields are also on the rise in the wake of the EU and the U.K. agreeing to reset their post-Brexit relations.
Yields on 10-year U.K. government bonds, known as gilts, were up by around 7 basis points at 9:58 a.m. in London.
Bond yields and prices move in opposite directions.
— Chloe Taylor
European stocks open lower
European shares opened in negative territory on Monday, with the Stoxx 600 down 0.4% shortly after the opening bell.
Most sectors and all major bourses saw losses, with the FTSE 100 and the CAC 40 shedding 0.5%, while Germany’s DAX traded 0.2% lower.
— Chloe Taylor
Trump tells Walmart to ‘eat the tariffs’
President Donald Trump took aim at Walmart on social media over the weekend.
“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump wrote in a Saturday post on Truth Social.
“Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING,” he added in the post. “I’ll be watching, and so will your customers!!!”
Walmart said in a statement following the post that it was working to keep prices as low as can be. That comes after the company’s finance chief warned last week that consumers may see higher price tags as a result of Trump’s tariff policy.
“We have always worked to keep our prices as low as possible and we won’t stop,” Walmart said in the statement. “We’ll keep prices as low as we can for as long as we can given the reality of small retail margins.”
— Alex Harring, Melissa Repko and Leslie Josephs
Stocks come off winning week
Stocks recorded notable gains last week as investors applauded the U.S.-China deal to temporarily slash tariffs.
The Nasdaq Composite surged more than 7%. The S&P 500 jumped over 5% and posted a five-day winning streak. The Dow rallied more than 3% last week and climbed into positive territory for 2025.
— Alex Harring
Stock futures are lower
Stock futures traded in the red shortly after 6 p.m. ET.
Dow futures lost 283 points, or 0.7%. S&P 500 futures fell 0.7%, while Nasdaq 100 futures slid 0.8%.
— Alex Harring
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