The stock market took a hit on Monday, marking its first trading day since the US government’s credit standing took a significant hit.
The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 Index all reported declines right after the market opened. This followed a weekend that saw equity futures drop and a sharp rise in bond yields due to concerns over US debt.
The Dow opened down by 217 points, which is a 0.6% decrease. Meanwhile, the S&P and Nasdaq experienced drops of 1% and 1.3%, respectively.
Market reactions were shaken when Moody’s downgraded the federal government’s credit rating from Triple A to Double A. This was the first downgrade of its kind by an agency regarding US creditworthiness.
The downgrade points to “an increase in the government’s debt-interest payment ratio to a level significantly higher than similarly rated sovereigns,” as noted in a release from Friday.
This assessment came as House Republicans pushed forward legislation to extend President Trump’s 2017 tax law and introduced bills that would add various deductions. Many economic analysts warn that this could contribute trillions more to the national debt.
Currently, US debt exceeds $36 trillion and is anticipated to grow even more quickly as rising interest rates become a heavier burden. Both parties—Democrats and Republicans—blame each other for steering the country toward a debt crisis, yet neither President Trump nor former President Biden took substantial action to mitigate the national debt during their terms.
developing
