US stock futures took a hit on Monday as Wall Street processed Moody’s downgrade of the US credit rating and new developments in President Trump’s tariff salvos.
Dow Jones Industrial Average futures (YM=F) dropped around 340 points, or 0.8%. Contracts tied to the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) were down 1.2% and 1.6%, respectively.
Moody’s cut the US government’s long-term credit rating from Aaa to Aa1 late Friday, citing escalating deficits and the increasing burden of refinancing debt amid elevated interest rates. The downgrade brings Moody’s in line with Fitch and S&P, which previously stripped the US of its top-tier rating.
The bearish tone in futures trading follows a bullish run for equities. Investors last week embraced news of a temporary US-China tariff truce, which sent all three major indexes to a banner week. The Nasdaq surged over 7%, while the S&P 500 added more than 5% in a five-day rally. The Dow climbed more than 3%, finishing Friday’s session up more than 300 points.
Asian markets saw a similar reversal of last week’s upward trajectory after the release of disappointing Chinese economic data.
With Wall Street hungry for any tariff news, Trump provided some on social media with a broadside at US retail giant Walmart (WMT), urging the company to “eat the tariffs.” It represented the latest pushback from the president against companies showing consumers the cost of his economic moves, after a brief tit-for-tat last month with Amazon (AMZN).
This week’s calendar is light on scheduled economic announcements, and the market is monitoring manufacturing data and initial jobless claims. Wall Street is also awaiting progress on the Republican tax-and-spend bill, which hit a key stumbling block late last week from inside the party.
On the earnings front, with many of the heavy-hitters already reporting for the quarter, attention will shift to key names in retail and tech. Target (TGT), Home Depot (HD), and Workday (WDAY) are all slated to report.
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