US stock futures fell sharply on Monday after Moody’s downgraded the US credit rating, triggering fears of higher debt and borrowing costs.
Wall Street woke up to a reality check as US stock futures slipped significantly, reflecting market anxiety over America’s growing debt burden. The sudden sell-off came after Moody’s Investors Service downgraded the US government’s long-term credit rating from Aaa to Aa1, removing its final perfect rating among the major credit agencies.
👉 Moody’s cited ballooning fiscal deficits and high refinancing costs due to elevated interest rates as the main reasons behind the downgrade.
The market reaction was swift and negative. Futures tied to major US indexes recorded substantial declines:
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Dow Jones futures dropped by 349 points (down 0.8%)
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S&P 500 futures slipped 1.2%
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Nasdaq-100 futures saw the biggest hit, tumbling 1.6%
This broad sell-off across futures indicates a strong risk-off sentiment in the markets, with investors becoming cautious about the long-term financial health of the US economy.
📈 Alongside equities, bond yields also surged past key psychological levels, signaling further pressure on the market:
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30-year Treasury yield jumped over the critical 5% mark to 5.023%
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10-year Treasury yield rose to 4.546%
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2-year Treasury yield hovered just above 4%
These moves in the bond market reflect investors’ concerns that refinancing the massive US debt will become more expensive in the near future.
🔍 The downgrade has reignited worries over the fiscal discipline of the US government and its ability to manage increasing debt at a time when interest rates remain high.
As Wall Street reacts, all eyes will be on the Federal Reserve and upcoming economic indicators to assess the next steps in monetary policy.