U.S. Credit Downgrade Triggers Market Jitters
On monday, U.S. stocks opened lower following Moody’s downgrade of the country’s credit rating.The S&P 500 and Nasdaq Composite fell by 0.8% and 1%, respectively.The Dow Jones Industrial Average also lost over 200 points. Though,within 45 minutes,buyers pushed major indices nearly flat.
Moody’s cut the U.S. rating from Aaa to Aa1, citing budget deficits and debt refinancing burdens. This move, combined with broader market concerns, dampened investor sentiment. The 30-year Treasury yield climbed to 5%, nearing an 18-year high.The 10-year yield surged above 4.5%, pressuring stocks. The downgrade reflects worries about U.S. debt. Despite recent deals with China and the UK, President Trump’s tariff policy remains a concern.
Moody’s downgrade is more symbolic but could push up Treasury yields, affecting the market. RBC Capital Markets’ lori Calvasina noted the symbolic importance but warned of potential yield increases.
Despite a positive week, with the Nasdaq up 7% and the S&P 500 up 5%, Monday saw a downturn. The 30-year Treasury yield hit 5.03%,the highest as october 2023.
Cryptocurrencies also felt the impact. Bitcoin dropped to $102k after hitting $107k on Sunday. Analysts remain bullish on crypto, seeing room for growth.
Moody’s downgrade comes as the Fed kept interest rates unchanged. The downgrade aligns with the country’s debt outlook. Investors seek more clarity and deals.
While the week ended positively, Monday’s dip shows ongoing market volatility.The Fed’s decision and geopolitical factors influence investor confidence.
