Business
Stock Futures Slide After U.S. Debt Downgrade Raises Deficit Concerns
U.S. debt downgrade
Early Monday saw a decline in stock futures as investors reacted to Moody’s downgrading the U.S. credit rating.
Dow Jones Industrial Average-linked futures fell 337 points, or 0.79%. Nasdaq 100 futures fell 1.19%, while S&P 500 futures declined 0.97%.
Moody’s downgraded the nation’s rating from Aaa to Aa1 on Friday, bringing the agency into line with its peers. The firm mentioned the consequences of rolling over current U.S. loans during a time of high borrowing costs, as well as the funding difficulties associated with the federal government’s widening budget deficit.
At a time when President Donald Trump’s evolving tariff policy is already exerting pressure on the economy, the debt downgrade may cause bond prices and yields to rise.
Regarding the U.S. rating adjustment, Peter Boockvar, chief investment officer at Bleakley Financial Group, stated that “the fundamental factor of less foreign demand for them and the growing size of the pile of debt that needs to be constantly refinanced is not going to change.” In the sense that a major rating agency is pointing out that the United States has burdensome debts and deficits, Moody’s downgrading “is symbolic.”
Following a successful week on Wall Street, when investors applauded the White House’s agreement with China to temporarily lower duties, the downgrade was announced. Following the announcement of Trump’s initial plan for high and wide import levies last month, the accord was viewed as a significant step forward for international commerce.
With a gain of over 7%, the technology-heavy Nasdaq Composite took the lead. The broad S&P 500 posted a five-day winning streak after jumping more than 5%.
Last week, the blue-chip Dow had a more than 3% rally. The 30-stock average entered positive territory for 2025 with a gain of more over 300 points on Friday.
Investors will keep an eye on statements made by U.S. central bank officials throughout the day on Monday, including those of Dallas Fed President Lorie Logan, New York Fed President John Williams, and Atlanta Federal Reserve President Raphael Bostic. Data on leading indicators is expected in the morning.