U.S. stock index futures fell sharply on Monday after credit rating agency Moody’s downgraded the U.S. government’s long-held top-tier rating, sparking renewed concerns over economic growth and ballooning debt levels.
As of 05:15 ET (09:15 GMT), Dow Jones Futures were down 385 points (0.9%), S&P 500 Futures dropped 76 points (1.3%), and Nasdaq 100 Futures slipped 360 points (1.7%).
The pullback follows a strong week on Wall Street, where optimism over a temporary tariff reduction agreement with China pushed major indexes higher. The Nasdaq Composite surged over 7%, the S&P 500 gained more than 5%, and the Dow Jones Industrial Average climbed over 3%, turning positive for 2025.
Moody’s Cuts U.S. Credit Rating to ‘Aa1’ Over Soaring Debt
On Friday, Moody’s downgraded the U.S. sovereign credit rating from ‘Aaa’ to ‘Aa1’, ending over a century of top-tier status since first awarding the triple-A rating in 1919. The agency cited the nation’s expanding $36 trillion debt burden and fiscal risks tied to proposed tax cuts under President Donald Trump’s administration.
Adding fuel to the downgrade, a Congressional committee on Sunday advanced Trump’s sweeping tax bill, which could add $3 trillion to $5 trillion to the national debt over the next decade. A vote in the House of Representatives is expected this week, despite pushback from some Republicans.
The Trump administration criticized Moody’s decision, pointing to initiatives aimed at reducing spending—most notably, efforts led by Elon Musk’s Department of Government Efficiency—though progress has so far been limited.
Fed Speakers in Focus Amid Policy Uncertainty
Traders will closely monitor comments from several Federal Reserve officials scheduled to speak throughout the day, including Atlanta Fed President Raphael Bostic, New York Fed President John Williams, and Dallas Fed President Lorie Logan, for clues about the central bank’s policy direction.
Trump Tells Walmart to Absorb Tariff Costs
Over the weekend, President Trump publicly called on Walmart (NYSE:WMT) to absorb the cost of import tariffs rather than passing them on to consumers. The statement followed Walmart’s announcement last week that it would be unable to fully offset rising import costs and would raise prices on certain goods from China—even under the reduced tariffs recently negotiated.
Walmart’s remarks underscore the growing challenges U.S. retailers face amid ongoing trade tensions. As the largest retailer in the world, Walmart is widely seen as a barometer of U.S. consumer strength.
Nvidia Showcases New AI Technology at Computex
Nvidia (NVDA) CEO Jensen Huang unveiled a suite of new artificial intelligence innovations during a nearly two-hour keynote at the Computex AI Exhibition in Taiwan. The announcements included new data center technology, AI-powered cloud computing services, consumer applications, and robotics software, further solidifying Nvidia’s leadership in the AI space.
Oil Prices Dip on Mixed Chinese Data and U.S. Credit Concerns
Crude oil prices retreated on Monday, giving back some of last week’s gains amid cautious sentiment following Moody’s downgrade and mixed economic data from China.
As of 03:34 ET:
- Brent crude fell 0.5% to $65.10 per barrel
- West Texas Intermediate (WTI) dropped 0.5% to $61.65 per barrel
China’s industrial production for April exceeded expectations, signaling resilience in manufacturing despite U.S. tariff pressures. However, retail sales came in weaker than expected, raising concerns about domestic demand. Traders remain wary as the U.S.—the world’s largest oil consumer—faces heightened fiscal uncertainty.
