OPENING CALL
Stock futures were sinking after Moody's downgrading of U.S. debt, and while Treasury Secretary Scott Bessent downplayed the change , the move pushed up bond yields.
That raised the pressure around Trump's sweeping tax-cut bill, which advanced through the House Budget Committee on Sunday night. The bill could reach the House floor this week.
This week investors will be watching whether retailers repeat Walmart's warning that tariffs will lead to price increases.
Home Depot will report results on Tuesday, Lowe's and Target on Wednesday, and Deckers Outdoor and Williams-Sonoma announce earnings on Thursday.
Stocks to Watch
Tesla, Palantir, MicroStrategy and other favorites fell before the bell as a selloff in stocks resumed.
U.S.-listed shares of Diageo rose after it stuck to its guideance, despite expecting a tarrif hit.
Nvidia fell 3.6% after it set out plans to deepen its partnerships with Taiwanese companies including Foxconn, with which it plans to build an AI supercomputer.
UnitedHealth shares traded briskly and rose premarket. They rallied Friday after eight days of losses.
Walmart shares fell. Trump attacked the retailer Saturday , saying it shouldn't blame price increases on his trade levies and demanding it "eat" the tariffs.
Watch For:
Fed's Jefferson is due to speak at 8:45 a.m. Canada financial markets closed for Victoria Day and Patriot's Day holiday
Today's Headlines/Must Reads:
- Will Anyone Take the Factory Jobs Trump Wants to Bring Back to America?
- Rare-Earths Plants Are Popping Up Outside China
-America's College Towns Go From Boom to Bust
MARKET WRAPS
Forex:
The dollar extended its losses to reach a 10-day low against abasket of currencies in the wake of Moody's downgrade.
Sterling rose on reports that the U.K. and EU reached a new trade deal ahead of a summit in London.
Closer U.K.-EU alignment was sterling positive, ING said, adding that it expected any surprise progress to send the euro below 0.8400 pounds and sterling to rise to as high as $1.3400.
Bonds:
The 30-year Treasury yield rose above the key 5% level, in what KBC called a knee-jerk jump.
The Moody's downgrade was largely symbolic, with the two other rating agencies already having cut the rating before, it added.
Moody's decision added to the risks of Treasury curve steepening, Commerzbank said.
This could exacerbate the steepening bias in Treasurys ahead of this week's 20-year auction, however, after previous downgrades from other ratings firms, investors bought at Treasury weakness, and chances are that this time could be similar, it added.
UBS said that significant selling of Treasurys was unlikely.
Yields could rise by 10-15 basis points in the short term, as they did after the 2023 Fitch downgrade, but the downgrade was unlikely to trigger significant selling or changes in collateral haircuts.
Goldman Sachs raised its forecast for 10-year Treasurys to 4.5% from 4.0%.
The budget bill was not expected to result in a larger-than-expected increase in coupon issuance, and the risk of an immediate bearish Treasury reaction was low, Citi said.
However, unaddressed long-run fiscal concerns should continue to pressure long-end swap spreads lower, it added.
Energy:
Oil prices slipped, as market watchers focused on talks to end the war in Ukraine as Moody's downgrade added to concerns over the economic outlook and its potential impact on oil demand.
Meanwhile, fresh data from China showed signs of an economic slowdown in April .
Metals:
Gold prices climbed, supported by a softer dollar and Treasury secretary Scott Bessent's latest tariff warnings.
The market optimism seen just a week ago could be derailed at any moment, Swissquote Bank said, adding that the realization that such optimism may have been premature should trigger a return to safe-haven assets.
Copper
Copper prices edged higher, supported by a fourth straight weekly decline in inventories and a softer dollar.
"Base metals started the week on the front foot, gaining moderate momentum and breaking through near-term resistance levels that had previously capped upside moves," Sucden Financial said.
"This occurred in the absence of a strong fundamental or a macroeconomic driver, suggesting that the speculative sentiment towards base metals remains constructive overall."
ANZ warned there could be lower copper demand, of about 5%-10%, if global GDP growth falls below 3%.
Due to the red metal's widespread use across the economy, the metal is sensitive to turning points in the growth cycle, it said.
TODAY'S TOP HEADLINES
Porsche Tried to Be Both Ferrari and Mercedes. With the Trade War, It Struggles to Be Either.
When selling high-end cars, companies have tended to specialize in either luxury collectibles or high-volume SUVs. Porsche's attempt to do both risks an unsolvable contradiction.
Shares in the German automaker, battered in April, have been among the big winners from the recent tariff de-escalation, and are now trading at a valuation similar to where they were after the company's 2023 initial public offering.
GM Is Pushing Hard to Tank California's EV Mandate
General Motors went all in on electric cars. Now it is racing to reverse the nation's most aggressive EV mandate.
"We need your help!" GM said in an email it sent this past week to thousands of its white-collar employees. "Emissions standards that are not aligned with market realities pose a serious threat to our business by undermining consumer choice and vehicle affordability."
EU Lowers Growth Forecast as U.S. Tariffs Seen Hitting Exports
The European economy will grow more slowly than previously expected this year and next as higher U.S. tariffs hit exports, while inflation will cool more rapidly, the European Union's economists said Monday.
In its twice-yearly report on the economic outlook, the European Commission warned that a further rise in tariffs would inflict more damage on the bloc's economy, but also said increased spending on defense and a German investment drive to repair frayed infrastructure could lift activity.
Jamie Dimon's Would-Be Successors Audition for the Top Job at JPMorgan
The race to replace Jamie Dimon will be on full display Monday.
Top executives at JPMorgan Chase are gathering with shareholders for the bank's annual investor day, where they will give an update on the bank's strategy over hours of management presentations. But Monday's confab is also an effective audition for the biggest job on Wall Street.
Clean Energy Is Under Attack Even Where It's Booming
President Trump has made no secret of his disdain for renewable energy. Just as challenging for the industry is fighting policy battles in parts of the U.S. where business has flourished.
Tax credits for clean-electricity generation and manufacturing are set to vanish under a plan proposed last week by congressional Republicans. Meanwhile, lawmakers in states such as Texas and Arizona-home to some of the country's biggest renewable-energy projects-are considering clamping down with tougher permitting and rules.
Israel Says It Will Allow Food Into Gaza for the First Time in Months
Israel will allow the resumption of limited aid deliveries to the Gaza Strip, ending a nearly three-month blockade that has depleted humanitarian supplies in the enclave as the military expands its operations there.
The office of Prime Minister Benjamin Netanyahu announced Sunday that Israel will allow "a basic quantity of food to be brought in" to avoid a starvation crisis, an outcome it said would risk endangering its military campaign to defeat the militant group Hamas. The decision passed without a vote in the security cabinet, according to an Israeli official.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
Lithium 2Q
Economic Indicators $(ET)$:
Financial markets closed for Victoria Day, or Patriot's Day as it is known in Quebec.
Stocks to Watch:
Almonty Industries 1Q Rev C$7.9M; 1Q Loss C$34.6M
Western Energy Services Makes Lane Permanent CEO
Expected Major Events for Monday
04:30/JPN: Mar Tertiary Industry Index
08:30/UK: Feb Card Spending statistics
08:30/UK: S&P Global UK Consumer Sentiment Index
14:00/US: 1Q Quarterly Retail E-Commerce Sales
14:00/US: Apr Leading Indicators
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Monday
180 Degree Capital Corp $(TURN)$ is expected to report for 1Q.
8X8 Inc $(EGHT)$ is expected to report $-0.03 for 4Q.
ATI Physical Therapy Inc (ATIP) is expected to report for 1Q.
Agilysys Inc $(AGYS)$ is expected to report $0.12 for 4Q.
Daily Journal Corp $(DJCO)$ is expected to report for 2Q.
Flanigan's Enterprises Inc $(BDL)$ is expected to report for 2Q.
Hugoton Royalty Trust (HGTXU) is expected to report for 1Q.
LiveOne Inc (LVO) is expected to report $-0.04 for 4Q.
Mullen Automotive Inc (MULN) is expected to report for 2Q.
Presto Automation Inc $(PRST)$ is expected to report for 3Q.
Psychemedics Corp $(PMDI)$ is expected to report for 1Q.
T2 Biosystems Inc (TTOO) is expected to report for 1Q.
TVI Pacific Inc (TVI.V,TVIPF) is expected to report for 4Q.
Telomir Pharmaceuticals Inc (TELO) is expected to report for 1Q.
Tofutti Brands Inc (TOFB) is expected to report for 1Q.
Transcat Inc (TRNS) is expected to report $0.38 for 4Q.
Tvardi Therapeutics Inc (TVRD) is expected to report for 1Q.
USD Partners LP (USDP) is expected to report $0.16 for 1Q.
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ANALYST RATINGS ACTIONS
Acrivon Therapeutics Cut to Hold From Buy by Jones Trading
Caterpillar Raised to Neutral From Sell by UBS
Crescent Capital BDC Cut to Market Perform From Outperform by Keefe, Bruyette & Woods
Foot Locker Cut to Equal-Weight From Overweight by Barclays
Inozyme Pharma Cut to Equal-Weight From Overweight by Wells Fargo
Inozyme Pharma Cut to Hold From Buy by Jefferies
Inozyme Pharma Cut to Hold From Buy by Needham
Iovance Biotherapeutics Cut to Neutral From Buy by UBS
Martin Marietta Raised to Buy From Neutral by UBS
Neurogene Cut to Neutral From Outperform by Baird
Park Hotels & Resorts Cut to In-Line From Outperform by Evercore ISI Group
Sunstone Hotel Investors Raised to Outperform From In-Line by Evercore ISI Group
Terex Raised to Neutral From Sell by UBS
United Rentals Raised to Neutral From Sell by UBS
Vulcan Materials Raised to Buy From Neutral by UBS
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
May 19, 2025 06:07 ET (10:07 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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