Key Events
Pinned Post
Stock markets were set for a moody Monday after Moody’s downgrade of its rating on U.S. sovereign debt the previous week.
Dow Jones Industrial Average futures were down 350 points, or 0.8%. S&P 500 futures were falling 1.1% and Nasdaq 100 futures dropping 1.4%.
Moody’s cut its rating on U.S. sovereign debt from AAA status to Aa1 on Friday. The ratings agency warned the U.S. was on a trajectory to increase spending, citing the potential extension of President Donald Trump’s tax cuts from 2017, which could add around $4 trillion to the deficit over the next decade.
“This is a major symbolic move as Moody’s were the last of the major rating agencies to have the U.S. at the top rating,” wrote Deutsche Bank analyst Jim Reid. “At this stage there are no signs of any serious deficit restraint” in Congress.
While the Trump administration downplayed the move, with Treasury Secretary Scott Bessent calling it “a lagging indicator” in an interview on NBC News on Sunday, the move pushed up bond yields. The yield on the benchmark 10-year Treasury note stood at 4.523% early on Monday, ticking up from the previous week.
On the corporate front this week, investors will be watching whether retailers repeat Walmart’s warning that tariffs will lead to price increases. Home Depot will report results on Tuesday, Lowe’s and Target on Wednesday, and Deckers Outdoor and Williams-Sonoma announce earnings on Thursday.
There will be relatively little new economic data, with S&P Global releasing its manufacturing and services PMI on Thursday, the same day as The National Association of Realtors reports existing-home sales, while the Census Bureau reports new home sales on Friday.
