Wall Street Shrugs Off Moody's Cut: Closing Bell

Watch comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Alix Steel, Scarlet Fu, Carol Massar and Tim Stenovec.

A renewed wave of dip buying fueled a rebound in stocks, with traders looking past the US credit downgrade by Moody’s Ratings that had earlier sent bond yields jumping. The dollar fell.

After a morning slide that topped 1%, the S&P 500 rose for a sixth straight day to close on the brink of a bull market. Several Wall Street strategists said any pullback could be a buying opportunity amid momentum fueled by the recent easing of global trade tensions. Treasuries also bounced across the curve, following a selloff that briefly drove 30-year yields above 5%.

The US lost its last triple-A credit score from a major international ratings firm Friday, with Moody’s citing more than a decade of inaction by successive administrations and Congress to arrest a trend of large fiscal deficits. Treasury Secretary Scott Bessent on Sunday downplayed concerns, saying the government is determined to lower spending and boost the economy.

“Monday’s price action answered the question: What would happen if Moody’s threw a downgrade party, and nobody came?” said Ian Lyngen and Vail Hartman at BMO Capital Markets. “As a referendum on the relevance of the rating agencies, investors are clearly siding with Bessent who commented that they are lagging indicators.”

Thomas Lee at Fundstrat Global Advisors sees the Moody’s downgrade as a “largely non-event,” while adding that in case of any stock weakness, he would be “buying this dip aggressively.”

“There is no “surprise” here as Moody’s is citing facts we already know, the sizable US deficit,” Lee said. “And we doubt any major fixed-income manager is surprised. There is simply no incremental information here.”

The S&P 500 rose 0.1%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average added 0.3%.

The yield on 10-year Treasuries fell three basis points to 4.45%. A dollar gauge slid 0.6%. Oil edged up after briefly falling when Donald Trump said Moscow and Kyiv would begin talks “immediately” on ending the war in Ukraine.

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