S&P 500 Climbs Despite Moody’s Downgrade of U.S. Credit Rating

Investors shrug off economic concerns as Nvidia shines and Reddit dips on AI fears

Markets Bounce Back After Early Jitters

The S&P 500 closed higher on Monday, shaking off early losses triggered by a downgrade of the U.S. credit rating from Moody’s, which cited concerns over rising debt and slowing growth. Investors responded by buying the dip, particularly in tech and healthcare stocks.

By 20:00 GMT:

• Dow Jones rose 137 points (+0.1%)
• S&P 500 edged down slightly (-0.1%)
• NASDAQ Composite inched up 0.02%

Moody’s Downgrades U.S. Credit Rating

Moody’s cut the U.S. sovereign rating from ‘Aaa’ to ‘Aa1’ — the last of the major agencies to strip the U.S. of its top-tier rating since it was first awarded in 1919. The downgrade pushed Treasury yields higher and highlighted fears around America’s escalating $36 trillion debt.

The decision follows President Trump’s proposed tax cuts, which are estimated to add $3 to $5 trillion to the national debt over the next decade. The bill cleared a House committee on Sunday and faces a vote later this week.

While Treasury Secretary Scott Bessent downplayed the downgrade as a "lagging indicator", concerns remain about the long-term economic impact.

Trump Clashes with Walmart Over Tariff Impact

President Trump also criticised Walmart, stating the retail giant should "absorb" tariff-related cost increases rather than pass them on to consumers.

Walmart warned last week that it could not shield customers from the effects of recent U.S.-China tariffs, even after the two countries agreed to reduce levies. The stock fell 1.5%, underlining the strain on U.S. retailers reliant on imports.

Nvidia Leads Tech with Major AI Announcements

At the Computex AI exhibition in Taiwan, Nvidia CEO Jensen Huang unveiled an extensive lineup of AI-powered technologies. These include:

• New data centre platforms
• AI tools for consumers and businesses
• Robotic software solutions

Nvidia’s continued dominance in AI is a key driver of tech optimism, with its developments reinforcing investor interest in the sector.

Mixed Day for Big Names: UnitedHealth Soars, Reddit Drops

Healthcare giant UnitedHealth Group rose over 7% after its new CEO and other insiders bought shares following recent price dips, boosting market confidence.

In contrast, Reddit Inc dropped 4% after Wells Fargo downgraded the stock, citing pressure from Google’s new AI-led search features, which could affect Reddit’s web traffic and advertising revenue.

Resilience in Markets, but Risks Remain

Despite Moody’s downgrade and ongoing debt concerns, U.S. markets showed resilience, lifted by investor appetite for tech and healthcare stocks. Nvidia’s AI momentum and UnitedHealth’s insider confidence helped steady sentiment.

However, fiscal uncertainty, tariff tensions, and geopolitical factors continue to cloud the outlook. For now, the markets are holding up — but caution is warranted in the months ahead.

Sources: (Investing.com, Reuters)