US Stock Market Reaction to Moody’s Downgrade

US stocks experienced a decline on Monday morning, marking the first trading session following Moody’s recent downgrade.

By 10:45 AM ET, the Dow Jones Industrial Average was down slightly, less than 0.1%, or about 45 points. Meanwhile, the S&P 500 and Nasdaq saw declines of 0.3% and 0.5%, respectively.

This downturn came after President Trump had previously announced a 90-day truce with China aimed at reducing tariffs—a move that had buoyed major stock indexes last week. But it seems that optimism didn’t last long.

Moody’s adjusted the nation’s credit rating down by one notch, resulting in a rating of AA1, which is just below the top score of AAA.

The agency pointed to concerns over the rising costs of funding the fiscal deficit and the increasing burden of existing debt, largely fueled by the persistently high interest rates.

This downgrade led to a spike in US Treasury yields on Monday, with the yield on 30-year bonds reaching 5.03%, a level not seen since November 2023.

By 10:45 AM ET, the yields on 2019 notes were around 4.976%, while the 10-year and 2019 yields were at 4.501% and 3.983%, respectively.