S&P 500 claws back losses as investors shake off Moody’s downgrade: Live updates

The S&P 500 clawed back its earlier losses on Monday as Treasury yields traded off their lowest levels.

The benchmark added 0.3, while the Dow Jones Industrial Average rose 165 points, or 0.4%. The Nasdaq Composite was unchanged.

Treasury yields spiked after Moody’s lowered the U.S. credit rating down one notch to Aa1 from Aaa, bringing the agency in line with peers. The firm cited financing challenges tied to the federal government’s growing budget deficit and the ramifications of rolling over existing U.S. debts in a period of high borrowing costs.

The debt downgrade pressured bond prices, sending yields higher, at a time when the economy is already awaiting the full impact of President Donald Trump’s unfolding tariff policy. The 30-year U.S. bond yield traded above 5% on Monday and the 10-year yield topped 4.5%, levels that hurt equity markets last month and helped lead Trump to back off his stiffest tariff measures. Rates on mortgages, car loans and credit cards track the 10-year yield.

Although equities had retreated pretty severely in Monday’s premarket session — with Dow futures down more than 300 points — they pared their early losses as Treasury yields retreated from their highest levels of the session.

“The Moody’s report didn’t highlight anything that every investor doesn’t already know about the U.S. fiscal situation,” said Ross Mayfield, investment analyst at Baird. “To me, it just kind of provided a little bit of cover for the market to take a breather here, but nothing that structurally changes our bullishness on where we think we’ll be in the next six to 12 months.”

Traders now see more trade deals as key to keeping the stock market comeback going, if higher yields don’t scare away investors first.