Moody's downgraded the U.S. credit rating to Aa1 from Aaa
Stock futures are sharply lower this morning, after Moody’s downgraded the U.S. credit rating late Friday to Aa1 from Aaa, sparking a spike in Treasury yields. Futures on the Dow Jones Industrial Average (DJI) are down over 200 points, while S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) futures are also firmly in the red.
The credit downgrade -- Moody’s first move off a perfect rating for the U.S. -- cited concerns over growing deficits and long-term refinancing risks in a high-rate environment. In response, the 30-year Treasury yield topped 5%, while the 10-year yield rose above 4.5%, levels that pressured equities last month and previously led the White House to ease its tariff stance.
Continue reading for more on today's market, including:
- How stocks perform around Memorial Day weekend.
- There was more to last week's rally than tariff relief and inflation data.
- Plus, WMT's tariff backlash; NVDA's AI update; and TSLA's weak sales trends.
5 Things You Need to Know Today
- The Cboe Options Exchange (CBOE) saw more than 2.9 million call contracts and over 1.2 million put contracts exchanged on Friday. The single-session equity put/call ratio fell to 0.43, while the 21-day moving average stayed at 0.59.
- Walmart Inc (NYSE:WMT) stock is down 1.9% premarket, after President Donald Trump criticized the retailer over its recent comments on tariffs. In a Truth Social post, Trump said Walmart should "EAT THE TARIFFS" instead of passing price increases to customers. A company spokesperson said Walmart will “keep prices as low as we can for as long as we can” despite narrow retail margins. Year over year, WMT is up 53.5%.
- Nvidia Corp (NASDAQ:NVDA) stock is off 2.8% in electronic trading, after CEO Jensen Huang announced the semiconductor giant will open its artificial intelligence (AI) server platform to rival chipmakers, including Qualcomm and Marvell. Nvidia also revealed plans to work with Foxconn on building an AI factory supercomputer in Taiwan. NVDA is set to open below its year-to-date breakeven mark.
- Tesla Inc (NASDAQ:TSLA) stock is down 3.5% before the bell, as investors await the company’s weekly sales update from China. Recent delivery trends have been disappointing, with U.S. sales falling 13% in April and European sales dropping 49% year over year, following a weak first quarter. Coming into today, TSLA is down 13.3% year to date.
- Retail earnings, Fed speeches, and economic data on deck this week.
Asia Slips on Moody’s Downgrade; Europe Lower After Brexit Reset
Asian bourses were dinged by the Moody’s downgrade as well. Slowing retail sales out of China are also weighing. The Shanghai Composite and Hong Kong’s Hang Seng finished flat in response. Japan’s Nikkei gave back 0.7%, while small caps dragged the South Korean Kospi down 0.9%.
Over in Europe, markets are moving lower. The United Kingdom (UK) and the European Union (EU) agreed to a post-Brexit reset deal, featuring refined defense partnerships and trawling rights. This sent both the 30-year gilt and the British pound higher in response. At last check, London’s FTSE 100 is down 0.4%, while the French CAC 40 is off by 0.7%. German DAX is flat, held in check by a gap lower from auto giant Volkswagen.