Stock Market Today: Moody’s Downgrade Sends Markets Lower After Last Week’s Rally

I’ll now write the article based on the information gathered from my searches about today’s stock market.

Major Indexes Retreat as US Credit Rating Cut Dampens Investor Sentiment

The stock market is experiencing a significant pullback on Monday, May 19, 2025, as investors react to Moody’s downgrade of the United States’ credit rating. After a strong rally last week fueled by a temporary US-China trade truce, major indexes are now retreating amid renewed economic concerns.

The Dow Jones Industrial Average is down approximately 300 points (0.87%) in early trading, while the S&P 500 and Nasdaq Composite are also trading lower, with futures indicating drops of 50 points and 165 points respectively. This decline follows last week’s impressive gains, where the Nasdaq jumped over 7% and the S&P 500 gained 5% during a five-day winning streak that had pushed the Dow into positive territory for 2025.

Moody’s Downgrade Shakes Market Confidence

Late Friday, Moody’s downgraded the US government’s long-term credit rating from Aaa to Aa1, citing escalating deficits and the increasing burden of refinancing debt amid elevated interest rates. This move brings Moody’s in line with Fitch and S&P, which had previously stripped the US of its top-tier rating.

The downgrade has particularly impacted Treasury yields, which extended Friday’s decline in early trading. Gold prices have seen a sharp rebound as investors seek safe-haven assets amid equity market turbulence.

Tech Stocks Lead the Decline

Technology stocks, which led last week’s rally, are now at the forefront of today’s decline. In pre-market trading, Tesla (TSLA) and Palantir are down approximately 4%, while Nvidia (NVDA) and AMD have fallen around 2%. Other tech giants including Apple (AAPL), Alphabet (GOOGL), Meta (META), and Microsoft (MSFT) are all down over 1%.

Nvidia is experiencing a particularly significant drop of 3.24% following news that the company will halt the export of its Hopper architecture to China amid escalating US export controls on semiconductors. This decision has forced Nvidia to write off $55 billion in inventory as it develops alternative products for the Chinese market.

Key Earnings Reports This Week

Several important earnings reports are scheduled for release this week, potentially influencing market direction. Today’s reports include ZIM Integrated Shipping Services (ZIM), which is expected to report a 152% increase in earnings per share compared to the same quarter last year, and Global Ship Lease (GSL), projected to report earnings of $2.27 per share.

Later in the week, major retailers and tech companies will report their quarterly results, including Target (TGT), Home Depot (HD), TJX Companies, and Workday (WDAY). These reports will provide valuable insights into consumer spending and business investment trends.

Upcoming Economic Events

This week’s economic calendar includes several significant events that could impact market sentiment. Today, investors are watching the European Union’s Consumer Price Index (CPI) data for April, with inflation expected to hold steady at 2.2% year-over-year.

Several Federal Reserve officials are scheduled to speak today, including Philip Jefferson, who will join a panel at the Federal Reserve Bank of Atlanta’s Financial Markets Conference. Their remarks could provide insights into the Fed’s assessment of interest rates, inflation trends, and overall economic conditions.

Tuesday marks the start of the G7 Finance Ministers and Central Bank Governors meeting in Banff, Alberta, running through May 22. This gathering will address pressing global economic and financial challenges, including inflation and monetary policy coordination.

Market Outlook and Strategy

Despite today’s pullback, some analysts remain cautiously optimistic about the market’s near-term prospects. The S&P 500 could potentially push higher toward 6,138 during the week, though signs of market exhaustion are appearing after last week’s strong rally.

Investors should note that much of last week’s rally priced in the tariff relief between the US and China, but the persistent presence of some tariffs remains a concern. Major US retailers have already announced price increases on various goods effective late May through June, underscoring ongoing inflationary pressures.

For investors navigating this volatile environment, focusing on stocks with solid fundamentals and attractive valuations remains a prudent strategy, while caution is advised against highly leveraged small-cap stocks with negative free cash flow.

Global Market Impact

The US market decline is echoing across global markets, with European indices also trading lower. Germany’s DAX 30 is down 0.20%, the UK’s FTSE 100 has fallen 0.28%, French CAC 40 is down 0.41%, and the Euro Stoxx 50 has declined 0.50%.

Asian markets have similarly reversed last week’s upward trajectory, falling overnight Sunday as investors digested the US credit rating changes and disappointing Chinese economic data. China reported that industrial output expanded by 6.1% year-over-year in April, down from 7.7% in March, while retail sales rose 5.1%, versus an uptick of 5.9% in the previous month.

As markets navigate this challenging landscape, investors should remain vigilant about potential volatility while keeping an eye on upcoming earnings reports and economic data that could provide clearer direction for the remainder of the week.