Stocks traded mixed on Monday as Wall Street attempted to recover from earlier losses following Moody’s downgrade of the US credit rating. Investors also weighed escalating trade rhetoric from President Trump and rising Treasury yields.
The Dow Jones Industrial Average (DJI) rose 0.2%, buoyed by gains in financials and industrials. The S&P 500 (GSPC) hovered just below the flatline, off 0.05%, while the tech-heavy Nasdaq Composite (IXIC) slid 0.25% as weakness in chipmakers weighed on the index.
Market Movers
- Nvidia (NVDA) – : Shares fell slightly after CEO Jensen Huang revealed that the Trump administration’s China chip ban has cost the company $15 billion in sales. Speaking at the Computex trade show, Huang detailed a $5.5 billion write-off for the current quarter and called the export restrictions “deeply painful,” adding that no other company had ever walked away from such large sales or taxes.
- Tesla (TSLA) – : The stock dropped more than 2% as news emerged that Chinese electronics giant Xiaomi will unveil a direct rival to the Model Y. The Xiaomi YU7 EV is set to debut on May 22, stoking investor concern that Tesla may lose ground in a key international growth market just as competition heats up.
- Microsoft (MSFT) + : Shares inched up after the company introduced a bold AI roadmap at its annual Build conference. The tech giant unveiled plans for a future dominated by “AI agents” — autonomous tools that can complete tasks for users across apps and platforms. Microsoft is betting these agents will fundamentally reshape productivity and how businesses operate.
- Walmart (WMT) – : Shares slipped following pointed criticism from President Trump, who urged the retailer to “eat the tariffs” rather than passing costs onto consumers. The president’s comments come amid heightened scrutiny over corporate responses to trade policies and could keep pressure on large retailers navigating supply chain uncertainty.
Moody's Downgrade Hits Markets
Moody’s downgraded the US government’s credit rating from AAA to AA1 late Friday, citing unsustainable deficits and high interest expenses. The downgrade places Moody’s in line with Fitch and S&P, which previously stripped the US of its top-tier rating.
Markets initially dropped on the news, but strategists labeled the move a “non-event.” Past downgrades in 2011 and 2023 were followed by continued gains in equities, and analysts like Morgan Stanley’s Mike Wilson suggested any dip created a buying opportunity. “We would be buyers of such a dip,” Wilson said, noting that elevated Treasury yields — not credit rating shifts — pose the greater threat to equities.
Tariff Tensions and Globalization Create Uncertainty
Trade anxiety resurfaced after Treasury Secretary Scott Bessent warned that tariffs could return in full force unless countries negotiate in “good faith” during the current 90-day pause. President Trump added fuel to the fire with a social media jab at Walmart, intensifying pressure on multinational firms.
Citigroup CEO Jane Fraser highlighted broader macro concerns, writing in a blog post that the world is entering a new era of globalization defined less by cooperation and more by strategic self-interest. Her comments echoed recent moves by companies and governments to prioritize domestic resilience over global integration — a shift with major implications for trade, supply chains, and markets.
Retail Earnings and Economic Data in Focus This Week
With most megacap earnings in the rearview mirror, investor attention is shifting to retail. Target (TGT) and Home Depot (HD) are among the key names reporting this week, offering insight into consumer resilience amid inflation and rate pressure.
Meanwhile, the economic calendar is relatively light, with markets set to digest manufacturing data and initial jobless claims. Any surprises could stir fresh volatility, especially as longer-dated Treasury yields creep higher — the 10-year (TNX) neared 4.5% today, and the 30-year (TYX) breached 5% for the first time since 2023.
Looking Ahead
Despite a turbulent beginning, the market’s ability to absorb a credit downgrade and digest trade headlines showcases its recent resilience. While rising yields and geopolitical uncertainty remain headwinds, investors appear willing to bet on continued economic strength, for now. With retail earnings and labor market data on deck, this week will serve as a key test of just how solid that foundation really is.