S&P500 and Dow Jones: US Indices Rebound Today Despite Credit Downgrade Jitters

Stocks Rebound into Late Trading After Moody’s Credit Downgrade Jolts Early Session

Stocks recovered from steep early losses Monday as traders looked past a surprise downgrade of U.S. sovereign debt by Moody’s. Heading into the final hours of trading, the S&P 500 was up 0.1%, the Dow added 144 points, and the Nasdaq remained flat. The initial drop followed a sharp spike in Treasury yields after Moody’s lowered the U.S. credit rating from Aaa to Aa1, citing long-term concerns over federal deficits and elevated refinancing costs in a high-rate environment.

How Did Treasury Yields and Fed Signals Influence Market Tone?

The downgrade intensified pressure on U.S. bonds, sending the 10-year yield to 4.49% and the 30-year above 4.96%. Equities initially slid on the rate move, particularly in rate-sensitive sectors. However, yields later eased off session highs, allowing stocks to pare losses. Federal Reserve officials offered no relief—Atlanta Fed’s Raphael Bostic signaled minimal rate cuts ahead, while NY Fed’s John Williams said policy was well positioned for current economic risks.

Which Sectors Took the Hardest Hit from Rising Rates?

Energy and consumer discretionary were the day’s weakest performers within the S&P 500, reflecting pressure from both commodity swings and concerns about consumer sensitivity to higher borrowing costs. The semiconductor index (SOX) lost 0.9%, reinforcing pressure on high-growth tech. Only five of the eleven sectors were in positive territory as the market attempted to stabilize into the afternoon.

Which Stocks Are Making Big Moves on News and Technicals?

IBM stood out with a new all-time high, continuing its outperformance year-to-date with a 59% gain. UnitedHealth rallied 7% after last week’s 23% selloff, with traders buying the dip despite lingering uncertainty from a DOJ probe and executive shakeup. TXNM Energy jumped 7.3% following news of its $11.5 billion acquisition by Blackstone’s infrastructure arm.

Tesla and Palantir each dropped over 3%, part of broader tech weakness under pressure from higher yields. Regeneron slipped 1% after announcing it would acquire most of 23andMe’s assets for $256 million. Reddit fell more than 4% on a downgrade from Wells Fargo, which cited persistent search traffic disruptions.

Market Outlook: Can Stocks Withstand the Weight of Elevated Yields?

The market’s ability to rebound intraday reflects underlying bullish sentiment, but sustained upward momentum will depend on whether bond yields remain contained. With trade tensions resurfacing and fiscal uncertainty in focus, traders are watching for concrete signs of relief—either through easing rates, progress on trade, or stabilization in credit markets. Until then, equity gains may remain hard-fought.

More Information in our Economic Calendar.