Wall Street: S&P 500 Records Sixth Positive Day Amid US Debt Downgrade

Financial indices on Wall Street eventually recovered their positive momentum after initially dropping at the start of today’s session (May 19, 2025). Futures contracts fell by over 300 points, influenced by Moody’s downgrade of U.S. debt from Aaa to Aa1 with a stable outlook and ongoing uncertainty due to Donald Trump’s trade war. Ultimately, the S&P 500 recouped previous losses as yields on government bonds negotiated from their lowest levels. The benchmark index closed at +0.09%, the industrial Dow Jones rose by 137 points or 0.32%. The Nasdaq increased by 0.2%. Yields on government bonds also saw an uptick. Moody’s cited funding challenges tied to the growing federal deficit and the impact of rolling over existing U.S. debts during a high borrowing cost period. The debt downgrade pressured bond prices, pushing yields higher, amid expectations of full economic repercussions from President Trump’s evolving tariff policies. The yield on 30-year U.S. bonds traded above 5% today, while the 10-year yield surpassed 4.5%, levels that impacted stock markets last month and led Trump to soften his toughest tariff measures. Mortgage rates, auto loans, and credit card interest follow the 10-year bond yield. However, key averages trimmed early losses as government bond yields retreated from daily highs. ‘Moody’s report didn’t highlight anything investors don’t already know about the U.S. fiscal situation,’ said Ross Mayfield, investment analyst at Baird. ‘For me, it simply provided a small reprieve for the market to catch its breath here, but nothing that changes our structurally bullish stance for the next six to 12 months.’ Traders now see more trade deals as key to sustaining market returns if higher yields don’t first spook investors.