Stock Market Update

[BRIEFING.COM] The groundwork for the start of today's session was laid after the close on Friday when Moody's announced a downgrade of its U.S. credit rating to Aa from Aaa due to the increase in government debt and interest payment ratios that are significantly higher than similarly rated sovereigns.

That headline shock precipitated a spike in longer-dated Treasury yields, a 1.0% decline in the U.S. Dollar Index, and selling interest in the equity futures market.

The 10-yr note yield, which settled Friday's session at 4.44%, went as high as 4.56%, while the 30-yr bond yield, which settled Friday's session at 4.90%, kissed 5.04%. And then the selling stopped.

Treasury yields reversed, with the 10-yr note yield settling at 4.47% and the 30-yr bond yield settling at 4.94%. Stocks, in turn, benefited once again from buy-the-dip interest and lingering optimism about the possibility of Congress passing the large reconciliation bill. The U.S. Dollar Index was down 0.7%.

The final numbers don't connote a picture of strength on their own, but the stock market's relative strength is rooted in the understanding that the Dow, Nasdaq, S&P 500, and Russell 2000 had been down as much as 0.7%, 1.4%, 1.1%, and 1.5%, respectively.

Once the headline shock of the Moody's downgrade wore off, participants settled into the notion that it wasn't really a "surprise," given that Standard & Poor's and Fitch Ratings had downgraded their U.S. credit ratings years earlier. That thinking presumably fostered some short-covering activity in the Treasury market that extended to stocks, which saw the S&P 500 record its sixth straight winning session.

There wasn't much corporate news governing today's trade, which had an M&M feel to it (macro and mechanical).

JPMorgan Chase (JPM 264.94, -2.58, -1.0%) slightly increased its FY25 net interest income guidance; Walmart (WMT 98.14, -0.10, -0.1%) garnered a rebuke from President Trump that it should "eat the tariffs;" the CEO and CFO of UnitedHealth Group (UNH 315.89, +23.98, +8.2%) collectively bought stock worth approximately $30 million; and JPMorgan downgraded Netflix (NFLX 1191.64, +0.11, +0.01%) to Neutral from Overweight.

Seven S&P 500 sectors finished higher. The health care sector (+1.0%) led the way. The next biggest gainer was the consumer staples sector, which gained a modest 0.4%. The energy sector (-1.6%) was in the losing category and was the only sector down more than 0.3%.

Market breadth improved as the session continued but still favored decliners by a narrow margin at the NYSE and Nasdaq when the closing bell rang.

Today's economic data was limited to the Leading Economic Index for April, which registered a 1.0% decline (Briefing.com consensus -0.7%) versus a downwardly revised 0.8% decline (from -0.7%) in March.