S&P 500 Erases 1% Slide As Dip Buyers Wade Back In: Markets Wrap

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.

“We view this latest credit action as a headline risk rather than a fundamental shift for markets,” said Mark Haefele at UBS Global Wealth Management. “So while the downgrade may lean against some of the recent ‘good news’ momentum, we do not expect it to have a major direct impact on financial markets.”

Investors should buy any dips in US stocks fueled by Friday’s credit rating cut, as the trade truce with China has reduced the odds of a recession, according to Morgan Stanley’s Michael Wilson.

For a more persistent fall in risk assets, Max Kettner at HSBC Holdings Plc says the market would need to enter what he defines as “Danger Zone.” Put simply, we’d need to see higher rate expectations and the US 10-year yield rise above 4.7%, according to the strategist. 

“Until that is the case, we’d view any fall in risk assets as an opportunity to scale up exposure,” he noted.

Goldman Sachs Group Inc. strategist David Kostin expects the “Magnificent Seven” group of technology stocks to resume outperforming the broader S&P 500 on robust earnings trends.

While the earnings backdrop for the S&P 500 has stabilized in recent weeks, RBC Capital Markets strategists still anticipate further downward revisions for 2025.

A team lead by Lori Calvasina says “last week’s gap up in the stock market was largely deserved, but that upside from here may be limited without another major step-up improvement in broader macro expectations. They added that the market may be “a little ahead of itself from a fundamental perspective.”

“The search for fresh market catalysts begins,” said Chris Larkin at E*Trade from Morgan Stanley. “The S&P 500 ended last week up for the year, and just a little more than 3% below its all-time high. Whether it closes that gap in the near future is one thing, sustaining a rally past it is another.”

• Nvidia Corp. Chief Executive Officer Jensen Huang outlined plans to let customers deploy rival chips in data centers built around its technology, a move that acknowledges the growth of in-house semiconductor development by major clients such as Microsoft Corp. and Amazon.com Inc.

  • Nvidia and Abu Dhabi investment vehicle MGX are partnering with French firms to establish what they say will be Europe’s largest artificial intelligence data center campus, advancing French and Emirati ambitions in the field.

• Microsoft Corp. is adding models from Elon Musk’s xAI to its artificial intelligence marketplace.

• JPMorgan Chase & Co.’s second-quarter investment-banking fees could decline by more than analysts are expecting as volatility set off by Trump’s policy announcements continues to chill deals.

• Moody’s Ratings cut its ratings for deposits at some of the biggest lenders, including Bank of America Corp., JPMorgan Chase & Co., citing Friday’s downgrade of the US and the government’s weakened ability to support the firms.

• Nippon Steel Corp. has bolstered its pledge to invest in United States Steel Corp. in the event that President Trump approves the Japanese company’s proposed $14.1 billion takeover, according to a person familiar with the matter

• The US Justice Department has opened a probe into a recent breach at the leading cryptocurrency exchange Coinbase Global Inc., according to a person familiar with the matter.

• Royal Caribbean Cruises Ltd. regained its investment-grade status after Moody’s Ratings upgraded the global cruise operator’s credit rating on a strong demand outlook and better credit metrics.

• Wynn Resorts Ltd. is dropping its pursuit of a casino license with Related Cos. in New York, citing a rezoning process and local opposition that makes the opportunity less attractive.

• Solar companies slumped after conservative Republican lawmakers said they had secured a commitment from leadership to end key clean-energy tax credits earlier than planned, part of a sweeping deal aimed at allowing President Donald Trump’s giant tax and spending package to advance.

• Novavax Inc. jumped as US regulators fully approved its Covid vaccine, easing investors’ concerns after the clearance was delayed and US Health and Human Services Secretary Robert F. Kennedy Jr. raised doubts about its efficacy.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.1% as of 4 p.m. New York time

• The Nasdaq 100 was little changed

• The Dow Jones Industrial Average rose 0.3%

• The MSCI World Index rose 0.3%

• Bloomberg Magnificent 7 Total Return Index fell 0.3%

• The Russell 2000 Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.6%

• The euro rose 0.7% to $1.1240

• The British pound rose 0.6% to $1.3359

• The Japanese yen rose 0.6% to 144.85 per dollar

Cryptocurrencies

• Bitcoin rose 1.4% to $105,558.25

• Ether rose 5.2% to $2,518.64

Bonds

• The yield on 10-year Treasuries fell three basis points to 4.45%

• Germany’s 10-year yield was little changed at 2.59%

• Britain’s 10-year yield advanced two basis points to 4.66%

Commodities

• West Texas Intermediate crude rose 0.4% to $62.71 a barrel

• Spot gold rose 0.9% to $3,232.80 an ounce