Market Snapshot for Monday 5/19/2025
- S&P 500 – 5,963.60 (+0.088%)
- Dow Jones Industrial Average – 42,792.07 (+0.32%)
- NASDAQ – 19,215.46 (+0.023%)
Market Performance
The U.S. debt downgrade pushed the markets towards the flatline on Monday. What started with steeper losses in the morning ended the day with a relatively small change for the S&P 500 and the NASDAQ. The Dow Jones closed higher by a modest 0.3%. Despite initial losses, investors bought the dip, leading to modest gains by the close. Long-term bond yields opened the day firmly higher, but ticked lower as the day progressed, with the 10-year Treasury yield closing little changed at around the 4.45% mark.
- S&P 500: Closed higher for the sixth consecutive day, marking a 0.3% gain.
- Dow Jones Industrial Average: Added 0.2%, recovering from a 1% slide earlier in the session.
- Nasdaq Composite: Increased by 0.4%, with technology stocks leading to the recovery.
Economic Takeaways
Oil (WTI Crude)
- Price Movement: Crude oil prices settled marginally higher, with West Texas Intermediate (WTI) crude closing at $68.04 per barrel.
- Market Drivers: Investors reacted to signs of a breakdown in U.S.-Iran nuclear talks, which raised concerns over potential disruptions in oil supply.
Bitcoin (BTC)
- Price Movement: Bitcoin traded at approximately $105,683, reflecting a 0.78% decline from the previous close.
- Market Sentiment: The cryptocurrency experienced volatility, influenced by broader market uncertainties and investor sentiment shifts.
Gold
- Price Movement: Gold prices edged higher, with the SPDR Gold Shares ETF (GLD) closing at $297.52.
- Market Drivers: The uptick was attributed to safe-haven demand following Moody’s downgrade of the U.S. credit rating and a weaker U.S. dollar.
U.S. Dollar (USD)
- Market Sentiment: The U.S. dollar faced downward pressure as concerns over the nation’s fiscal outlook and trade-related uncertainties weighed on investor confidence.
Earnings
- First-quarter earnings season is winding down, with roughly 92% of companies in the S&P 500 having reported earnings.
The Credit Rating is on Everyone’s Mind
This past Friday evening, credit rating agency Moody’s downgraded the U.S. long-term issuer and senior unsecured ratings from Aaa to Aa1 and changed the outlook to stable from negative.
Moody’s cited an increase in government debt and interest payments to levels that are much higher than similarly rated sovereign issuers as the reason behind the downgrade.
Moody’s does not expect current fiscal proposals will result in a meaningful reduction in deficits over the coming years and expects the U.S. federal deficit to widen over the coming decade.
Analysts like John Sedunov and Ivory Johnson highlight that a credit downgrade indicates increased risk, which could lead to higher interest rates for loans like mortgages, car loans, and vacations.
Other analysts, like those at Capital Economics and JPMorgan, suggest the market reaction to the downgrade may be less dramatic than in previous instances, particularly in areas like stocks and bonds.
Spencer Hakimian and Ted Rossman emphasize the importance of fiscal policy in addressing the debt and deficit, suggesting that the downgrade may be a wake-up call for policy decisions.
“When you have a credit downgrade, that signals higher risk, which means higher payment to bear that risk.” – John Sedunov
“When our credit rating goes down, the expectation is that the cost of borrowing will increase.” – Ivory Johnson
“The downgrade itself doesn’t seem so far to have made much of a market splash.” – Capital Economics
“We think the reaction the reaction may be more muted than it was in 2023.” – JPMorgan
“The downgrade of the US credit rating by Moody’s is a continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector in the United States.” – Spencer Hakimian (Tolu Capital Management)
Top Gainers
Several stocks experienced significant gains. Some of the top gainers included:
- The Metals Company (TMC) with a 22.25% increase
- Novavax (NVAX) up 15.01%
- Sable Offshore Corp. (SOC) increased 14.41%
- Hims & Hers Health (HIMS) saw a 52-week change of 247.58%
- Zoom Info Technologies (ZI) increase 10.27%
- Hesai Group (HSAI) went higher by 10.07%
- Moderna Inc. (MRNA) cruised higher by 6.15%
- Oklo, Inc. (OKLO) soared 5.33%
Top Losers
The top US stock losers today, based on percentage change included:
- U Power (UCAR) lost a massive decline of -51.86%.
- TransCode Therapeutics (RNAZ) dipped 17.89%
- QuantumScape (QS) went lower by 16.07%
- Cemtrex (CETX) dropped by 15.64%
- Archer Aviation (ACHR) plummeted 14.36%
- Regencell Biosciences (RGC) closed down 10.43%
- Pony AI Inc. (PONY) went lower by 8.25%
- First Solar, Inc. (FSLR) dropped 7.59%
Notables
- US judge rejected Vanguard $40 million mutual fund settlement, citing the SEC accord.
- An analyst published an updated take on Gitlab prompting a 5% selloff.
- Mortgage rates jumped higher on Monday following Moody’s downgrade of U.S. debt, adding to the headwinds facing homebuyers.
- General Motors said it would stop exporting vehicles from US to China.
- US oil producer Continental Resources claims that Hess defrauded it out of $69 million.
Major U.S. Companies Reporting Tomorrow
- Home Depot (HD): Analysts anticipate earnings per share (EPS) of $3.60 on revenues of $39.2 billion. The company is expected to provide insights into consumer spending trends and the impact of recent tariff changes.
- Lowe’s (LOW): Projected EPS of $2.89 with revenues around $21.1 billion. Expectations include discussions on housing market dynamics and cost pressures.
- Target (TGT): Comparable store sales are expected to have fallen 1.5% year-over-year, though some analysts have warned that the metric could have declined 4%.
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