A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell on May 19, 2025, in New York City.
Timothy A. Clary | Afp | Getty Images
The S&P 500 slipped on Monday after Moody’s downgraded the U.S. credit rating late Friday, causing Treasury yields to spike.
The benchmark slipped 0.2%, while the Nasdaq Composite shed 0.4%. The Dow Jones Industrial Average traded 22 points higher, or 0.1%.
Moody’s lowered the U.S. credit rating down one notch to Aa1 from Aaa, bringing the agency in line with peers. The firm cited 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 awaiting the full impact of 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 hurt equity markets last month and helped lead Trump to back off his stiffest tariff measures. Rates on mortgages, car loans and credit cards track the 10-year yield.
Equities pared their early losses as Treasury yields retreated from their highest levels of the session.
Leading the 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 2%, Tesla shed 3% and Apple was off by 2%.
Although equities had retreated pretty severely in Monday’s premarket session — with Dow futures down more than 300 points — they clawed back a large portion of their losses by midmorning.
“The Moody’s report didn’t highlight anything that every investor doesn’t already know about the U.S. fiscal situation,” said Ross Mayfield, investment analyst at Baird. “To me, it just kind of provided a little bit of cover for the market to take a breather here, but nothing that structurally changes our bullishness on where we think we’ll be in the next six to 12 months.”
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 higher yields don’t scare away investors first.
22 stocks in the S&P 500 trade at new 52-week highs
22 stocks in the S&P 500 traded at new 52-week highs during Monday’s session.
Of these names, 17 tickers traded at new all-time highs. Stocks that hit this milestone included:
- The TJX Companies trading at all-time highs back to IPO in 1987
- Monster Beverage (formerly Hansen Natural) trading at all-time high levels back to its listing on the NASDAQ in 1992
- MasterCard trading at all-time high levels since its IPO in May, 2006
- Raytheon Technologies trading at all-time highs back to when the United Technologies name was adopted in 1975
- International Business Machines trading at all-time highs back to when it began publicly trading on the NYSE in Jan, 1962
- Visa trading at all-time high levels since its IPO in Mar, 2008
- Cardinal Health trading at all-time highs back to its IPO in 1983
- Axon Enterprise trading at all-time highs back to when TASER began trading in May, 2001
- Howmet Aerospace trading at all-time highs back to its Alcoa spinoff in Nov, 2016
- NRG Energy trading at all-time highs back to its IPO in May, 2000
— Christopher Hayes, Lisa Kailai Han
Small caps lag
Small caps fell sharply during Monday’s session.
The small cap-focused Russell 2000 slid nearly 1% in midday trading. By comparison, the S&P 500 ticked down just 0.2%.
Russell 2000 vs. S&P 500, 1-day
Monday’s action is the latest in a year of underperformance for small caps. The Russell 2000 has dropped more than 6% in 2025, while the S&P 500 has risen more than 1%.
— Alex Harring
China says U.S. undermined trade talks with Huawei chip warning
U.S. Secretary of the Treasury Scott Bessent speaks with China’s Vice Minister of Finance Liao Min, on the day of a bilateral meeting between the U.S. and China, in Geneva, Switzerland, May 11, 2025.
Keystone/eda/martial Trezzini | Via Reuters
China said Monday that the U.S. has undermined a preliminary trade deal between the two countries after the U.S. warned industry against using Huawei chips.
“China urges the U.S. to immediately correct its wrong practices and stop discriminatory measures against China,” a spokesperson for China’s Ministry of Commerce told a reporter, according to a Google translation.
“If the U.S. insists on its own way and continues to substantially damage China’s interests, China will take resolute measures to safeguard its legitimate rights and interests,” the spokesperson said.
— Kevin Breuninger, Spencer Kimball
UBS tells investors to seek a ‘full strategic allocation’ in U.S. equities despite recent rally and Moody’s downgrade
Despite the recent rally — and Moody’s downgrade of the U.S. sovereign credit rating by one notch on Friday to Aa1 — investors should continue phasing into equities, UBS wrote in a Monday note.
“We recently cut our Attractive rating on US equities to Neutral, following the strong recent rally. However, our current Neutral rating on U.S. equities should not be mistaken for a bearish view, and we continue to recommend a full strategic allocation,” the bank said. “The recent earnings season has demonstrated the strength in structural AI earnings trends, we expect U.S. stocks to move higher over the next 12 months, and we maintain our sector-level Attractive ratings on communications services, information technology, health care, and utilities.”
— Lisa Kailai Han
Recession risk is not gone despite tariff de-escalation, says Morgan Stanley chief global economist
De-escalating tensions between the Trump administration and China haven’t completely eliminated the risk of an economic slowdown, according to Morgan Stanley.
“The most recent de-escalation prompts the question of how much recession risks have fallen. The probability has surely fallen some at the margin, but we never had a recession as a baseline, partly because we assumed the peak announced tariff rates would not last,” wrote Seth Carpenter, the firm’s chief global economist. “Recession risk is not gone, however, because tariffs have both direct effects and indirect effects. Even with lower tariffs, the direct drag even is still meaningful.”
Carpenter added that this was bolstered by historical trends.
“The data show that the tariffs on China in the first Trump Administration were followed by a drop in industrial production and manufacturing employment,” he continued. “Tariffs are taxes, and 2/3 of imports from China are capital goods or intermediate inputs. So tariffs on China are in effect a tax on domestic capex and manufacturing.”
— Lisa Kailai Han
Fed’s Bostic says he’s ‘leaning’ toward one rate cut in 2025
Atlanta Fed president Raphael Bostic told CNBC’s “Squawk Box” on Monday that he currently prefers only one rate cut this year as the central bank and is concerned about recent signs that inflation expectations are climbing.
“For me right now, I’m expecting it’s going to take a bit longer for that to sort out. … I’m leaning much more into one cut this year, because I think it will take time, and then we’ll sort of have to see,” Bostic said on “Squawk Box.”
— Jesse Pound
Stocks stumble to start the week
Stocks making premarket moves
An employee counts inventory in a Walmart Supercenter on May 15, 2025 in Austin, Texas.
Brandon Bell | Getty Images
Here are some of the stocks moving in premarket trading:
- Walmart — Shares slipped 1.7% after President Donald Trump said on Saturday that Walmart should “eat the tariffs” and Treasury Secretary Scott Bessent told NBC’s “Meet the Press” on Sunday CEO Doug McMillon told him the company would absorb some of the levies.
- Netflix — The streaming giant shed about 2% following downgrade to neutral from overweight at JPMorgan. The bank cited the stock’s recent outperformance.
- Reddit — The social media stock fell nearly 7% on the back of a downgrade at Wells Fargo to equal weight from overweight. Disruptions in search traffic are likely to become permanent as Google integrates full artificial intelligence search capabilities, the bank said.
To see more names moving in the premarket, read the full story here.
—Michelle Fox
UBS upgrades Archer-Daniels-Midland to buy on ‘underappreciated policy tailwinds’
Thomas Fuller | SOPA Images | Lightrocket | Getty Images
UBS has upgraded agriculture commodities company Archer-Daniels-Midland to buy as the bank sees “underappreciated policy tailwinds” lifting the stock.
UBS has raised it stock price target for Archer-Daniels-Midland to $60, implying more than 19% upside from Friday’s close of $50.13 per share.
The budget reconciliation bill drafted by the House Ways and Means Committee would end production tax credits for renewable diesel fuel that uses imported feed stocks. This will lift demand for domestic soybean oil, benefiting Archer-Daniels-Midland.
UBS sees bad news associated with Archer-Daniels-Midland’s nutrition segment priced in at this point and its earnings have bottomed. The company has underperformed the S&P 500 by about 75% over the past two years.
— Spencer Kimball
S&P 500’s upside-downside ratio is ‘not particularly attractive’ anymore, says Trivariate Research
Stocks have made a stunning comeback in the past few days, but Trivariate Research is dubious that this rally has legs.
“We appreciate that there can be meaningful disconnects between price action and fundamentals. However, we are starting to think the upside-downside ratio for the S&P 500 is not particularly attractive,” the firm wrote in a Sunday note.
Founder Adam Parker particularly pointed to tariff risks as one positive headwind going forward.
“We expect many companies to disappoint in the second half of this year, and see the risk-reward as skewed to the negative for risk-taking today. The median stock saw some gross margin contraction in April, despite the strong market rally. The median company’s gross margins fell to 45.5% in April, down nearly 100bps from the two months earlier,” he wrote. “Given tariffs may cause some companies to be challenged in passing along pricing without a commensurate loss in unit demand, and/or they might see rising input costs in certain areas, we think there is risk to lower margins for more than half the S&P 500 in the coming quarter.”
— Lisa Kailai Han
Loop Capital upgrades Charter Communications
Loop Capital is more optimistic on Charter Communications following its deal to merge with Cox Communications.
The firm upgraded Charter to buy from hold in a Sunday note, and raised its price target to $510 per share from $430. Loop’s forecast implies about 19% upside from Friday’s $427.25 close.
Charter Communications stock in 2025.
“The transaction is expected to be accretive, reduce leverage, and deliver scale efficiencies – positioning CHTR as the largest domestic cable operator,” analyst Alan Gould said. “Additionally, CHTR’s Life Unlimited rebrand, which provides a converged broadband/mobile offering as well as customer service guarantees, is showing early traction.”
— Brian Evans
30-year Treasury yield tops 5% after U.S. debt downgrade
People take pictures of the U.S. Treasury Department building in Washington, D.C., on Feb. 6, 2025.
Mandel Ngan | AFP | Getty Images
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’
US President Donald Trump speaks to members of the media accompanying him aboard Airforce One, after leaving Abu Dhabi at the end of his Middle East tour on May 16, 2025.
Brendan Smialowski | Afp | Getty Images
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
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 12, 2025.
Brendan Mcdermid | Reuters
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