Market Plunges as Moody’s Downgrades US Credit Rating: Your Complete Stock Market Update for May 19, 2025

The stock market is experiencing significant turbulence today as investors react to Moody’s downgrade of the United States’ sovereign credit rating. Major indexes are trading lower, with concerns about growing national debt and upcoming corporate earnings weighing on investor sentiment. Here’s your comprehensive market update for Monday, May 19, 2025.

Major Market Indexes Tumble Following Credit Downgrade

All three major U.S. stock indexes are trading significantly lower today following Moody’s decision to cut the U.S. government’s long-term credit rating from Aaa to Aa1 late Friday. As of midday trading:

– The Dow Jones Industrial Average is down approximately 350 points (0.8%), trading around 42,300.
– The S&P 500 has fallen 1.1%, erasing some of last week’s 5% gain.
– The Nasdaq Composite is experiencing the steepest decline, down 1.4% as tech stocks lead the selloff.

This market reversal comes after a strong previous week when all three major indexes posted significant gains following news of a temporary U.S.-China tariff truce. The Nasdaq had surged over 7% last week, while the S&P 500 added more than 5%, and the Dow climbed more than 3%.

Moody’s Downgrade Rattles Markets

Moody’s decision to downgrade U.S. sovereign debt from AAA status to Aa1 has sent shockwaves through financial markets. The ratings agency cited concerns about the nation’s escalating debt trajectory, which now stands at approximately $36 trillion.

Moody’s specifically warned about the potential extension of President Donald Trump’s tax cuts from 2017, which could add around $4 trillion to the deficit over the next decade. This downgrade is particularly significant as Moody’s was the last major rating agency to maintain the U.S. at the top-tier rating, with S&P and Fitch having previously downgraded the country.

Treasury Secretary Scott Bessent attempted to downplay the move, calling it “a lagging indicator” during a Sunday interview on NBC News. However, markets have responded negatively, with Treasury yields rising—the 10-year Treasury note yield has increased to 4.52%.

Major Stocks Making Headlines

Several major stocks are experiencing significant movements today:

– Tesla (TSLA) is leading losses among megacap stocks, down 4.4% in premarket trading.
– Nvidia (NVDA) and Advanced Micro Devices (AMD) are both down more than 3% as semiconductor stocks face selling pressure.
– Intel (INTC) has declined nearly 2% in early trading.
– Walmart (WMT) is in focus after President Trump urged the retail giant to “eat the tariffs” in a social media post, suggesting ongoing tensions over how companies are communicating tariff impacts to consumers.
– Amazon (AMZN) is also being watched closely following similar exchanges with the administration last month regarding tariff impacts.

Key Upcoming Earnings Releases This Week

This week features several important earnings announcements that could significantly impact market direction:

Tuesday, May 20:
– Home Depot (HD)
– Palo Alto Networks (PANW)

Wednesday, May 21:
– Target (TGT)
– Lowe’s (LOW)
– Baidu (BIDU)
– XPeng (XPEV)
– Medtronic (MDT)
– Snowflake (SNOW)
– Zoom (ZM)

Thursday, May 22:
– Analog Devices (ADI)
– Intuit (INTU)
– Autodesk (ADSK)

Friday, May 23:
– Booz Allen Hamilton (BAH)

Retail earnings will be particularly scrutinized this week, as investors watch whether companies like Home Depot and Target echo Walmart’s recent warnings about tariffs potentially leading to price increases for consumers.

Important Economic Data and Events to Watch

Several key economic reports and events are scheduled for this week:

– Thursday, May 22: S&P Global will release its manufacturing and services PMI data, providing insights into economic activity.
– Thursday, May 22: The National Association of Realtors will report existing-home sales figures.
– Friday, May 23: The Census Bureau will release new home sales data.

Additionally, at least five Federal Reserve officials, including New York Fed President John Williams, are scheduled to make public remarks throughout the day, which could provide insights into future monetary policy direction.

Market Outlook

The market’s reaction to Moody’s downgrade highlights ongoing concerns about fiscal sustainability and the impact of potential tax cuts. While last week’s U.S.-China tariff truce provided a temporary boost to markets, today’s selloff suggests investors remain cautious about longer-term economic challenges.

With the quarterly earnings season in its final stages (over 90% of S&P 500 companies have already reported), attention is shifting to retail performance and how companies are navigating inflationary pressures and potential tariff impacts.

Investors should closely monitor upcoming economic data releases and Fed commentary for signals about economic health and potential policy shifts that could affect market direction in the coming weeks.

As always, maintaining a diversified portfolio and focusing on long-term investment goals remains prudent during periods of market volatility like we’re experiencing today.