Stock Market Live UpdatesMajor Indexes Pull Back After Recent Rally
U.S. stock markets retreated on Wednesday, May 21, 2025, as investors digested concerns about President Trump’s proposed tax-cut bill and continued to process last week’s sovereign credit rating downgrade by Moody’s. All three major indexes closed in negative territory, extending Tuesday’s losses.
The S&P 500 fell 0.4% to 5,940.46, ending its six-day winning streak. Eight out of 10 broad sectors of the benchmark index finished lower, with energy stocks leading the decline. The Dow Jones Industrial Average dropped 0.3% or 114.83 points to close at 42,677.24, breaking a three-day winning run. Meanwhile, the tech-heavy Nasdaq Composite slid 0.4% to 19,142.71, primarily due to weakness among technology giants.
The market’s cautious tone follows Moody’s May 16 decision to downgrade the U.S. sovereign credit rating by one notch to Aa1 from Aaa, citing the growing burden of financing the federal government’s outstanding budget deficit of $36 trillion and rising debt rollover costs in the high-interest rate environment.
Bond Market Reacts to Credit Downgrade
Treasury yields remained elevated following the rating downgrade, with the benchmark 10-Year U.S. Treasury Note yield climbing to 4.5% and the 30-Year Treasury Note yield spiking more than 5%. These higher yields have significant implications for mortgage rates and borrowing costs across the economy.
The CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear gauge,” edged down 0.3% to 18.09, suggesting investors remain cautious but not panicked about current market conditions.
Key Earnings Reports in Focus
After the closing bell today, several notable companies are scheduled to report their quarterly earnings, which could significantly impact market sentiment tomorrow:
Snowflake Inc. (SNOW) is expected to report earnings per share of -$0.59 for the quarter ending April 30, representing a 32.95% improvement compared to the same period last year.
Zoom Communications, Inc. (ZM) is projected to report earnings of $0.70 per share, a 5.41% decrease year-over-year. The company has consistently beaten analyst expectations in recent quarters.
Other companies reporting today include Urban Outfitters, Inc. (URBN), EnerSys (ENS), LiveRamp Holdings, Inc. (RAMP), and American Superconductor Corporation (AMSC).
Notable Stock Movements
The travel sector led the market lower on Wednesday, with Airbnb Inc. (ABNB) dropping 3.3% as investors expressed concerns about consumer spending on vacations amid economic uncertainties.
In contrast, the Consumer Staples sector showed resilience, with the Consumer Staples Select Sector SPDR (XLP) rising 0.4%, as investors rotated into defensive positions.
Looking Ahead
Market participants will be closely monitoring upcoming economic data releases and Federal Reserve commentary for clues about the future direction of interest rates. The recent credit downgrade has heightened focus on fiscal policy, with particular attention on President Trump’s proposed tax cuts and their potential impact on the already substantial federal deficit.
Trading volume remains below average, with 16.14 billion shares changing hands on Tuesday, compared to the 20-session average of 17.38 billion, suggesting some investors may be taking a wait-and-see approach.
As earnings season continues and economic data rolls in, investors should prepare for potential volatility while keeping an eye on both fiscal policy developments and corporate performance in the days ahead.