By Joe Wallace and Hannah Erin Lang
The "Sell America" trade looks like it's back.
Stocks opened lower Monday, after Moody's Ratings downgraded the U.S. and a tax bill that would worsen the country's fiscal picture passed a key hurdle. The dollar weakened against most major currencies, and Treasurys fell in price, lifting yields.
On Friday, Moody's stripped the U.S. of its last triple-A credit rating, citing large fiscal deficits and rising interest costs. Adding to investor nerves about America's debt trajectory, the House Budget Committee approved President Trump's tax-and-spending bill late Sunday, a milestone for a proposal that is projected to add trillions of dollars to the deficit.
The bill has several more obstacles to clear in the House and Senate. "One thing stands out though, and that is that at this stage there are no signs of any serious deficit restraint," said Deutsche Bank strategist Jim Reid.
The trade war, meanwhile, prompted the European Union to cut its growth forecasts. And Diageo, the drinks giant behind Smirnoff and Johnnie Walker, warned of a potential $150 million hit from tariffs, though it said half of that could be offset through actions such as price increases and supply-chain adjustments.
Over the weekend, President Trump attacked Walmart for indicating it would raise prices in response to tariffs, saying the retail heavyweight and China should "eat the tariffs."
In recent market action:
In recent market action:
Major U.S. stock indexes fell. The tech-heavy Nasdaq Composite led losses, declining more than 1%. The S&P 500 was on course to snap a five-session winning streak.
The WSJ Dollar Index dropped.
Longer-dated bond yields topped 5%, lifted by unease about U.S. government borrowing. Thirty-year yields haven't settled above that level since the fall of 2023.
Stock indexes fell across Europe and in much of Asia.
Gold prices rose, resuming a rally that sent them to record highs in early May.
Write to Joe Wallace at joe.wallace@wsj.com and Hannah Erin Lang at hannah.lang@wsj.com
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(END) Dow Jones Newswires
May 19, 2025 09:41 ET (13:41 GMT)
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