| Name | Daily Close | Daily Change | Daily Change (%) |
|---|---|---|---|
| Dow | 42,654.74 | 331.99 | 0.78% |
| S&P 500 | 5,958.38 | 41.45 | 0.70% |
| Nasdaq | 19,211.10 | 98.78 | 0.52% |
| VIX | 19.82 | 2.58 | 14.97% |
| Gold | 3,244.50 | 57 | 1.81% |
| Oil | 62.05 | -0.45 | -0.70% |
US MARKET
Wall Street was able to claw back most of a slide that followed the US downgrade by Moody’s Ratings, but the market rebound wavered towards the end of the trading session as the S&P 500 came within striking distance of a bull market.
After briefly wiping out a 1.1% slide, the equity benchmark was little changed. By the close, the S&P 500 was unchanged, the Nasdaq 100 similarly unchanged, the Dow up 0.2%. Treasuries bounced, following a rout that briefly sent 30-year yields above 5%
The Moody’s downgrade was largely a non-event. There was no real surprise as Moody’s was citing facts the market already knew, namely the sizable US deficit. There’s a reason the 30-year is elevated. Moody’s was also last in line to downgrade, with S&P doing so in 2011, Fitch 2023. And we doubt any major fixed-income manager was surprised – there was simply no incremental information here. The latest credit action is largely a headline risk rather than a fundamental shift for markets. However, the US credit rating downgrade adds to a long list of uncertainties that the stock market is weighing right now, including tariff, fiscal, inflation and economic ones
Many strategists have come out with the message that any pullback in US equities be viewed as a buying opportunity amid momentum fueled by the recent US-China tariff truce. On the other side, concerns emerged about an overheated market. Pick your poison.
On the former side, Goldman Sachs Group Inc. strategist David Kostin expects the Mag Seven group of technology stocks to resume outperforming the broader S&P 500 on robust earnings trends.
On the latter side, While the earnings backdrop for the S&P 500 has stabilized in recent weeks, RBC Capital Markets strategists still anticipate further downward revisions for 2025. They stated that last week’s gap up in the stock market was largely deserved, but that upside from here may be limited without another major step-up improvement in broader macro expectations. They added that the market may be a little ahead of itself from a fundamental perspective.
One thing we can say factually, and this may surprise many, is that the recent rally has not been particularly broad-based. It has largely been driven by the retail side, and far less from the institutional. There is still a lot of money on the side lines.
The Australian sharemarket snapped its longest winning streak since August and tracked US futures lower as risk-off sentiment flooded equity markets, helped by Moody’s decision to strip the US of its AAA credit rating. The S&P/ASX 200 slipped 0.5% after advancing in the prior eight sessions. Eight of the bourse’s 11 sectors were lower, with materials and energy leading losses. The All Ordinaries slipped 0.6%.
Profit-taking hit Australian shares on Monday after credit ratings agency Moody’s downgraded America one notch to Aa1 – citing its ballooning fiscal deficit and increased interest costs. That drove the yield on 10-year Treasuries up another four bps. Gold rose almost 1% as investors flocked to assets not correlated to equities while Nasdaq 100 futures fell more than 1%.
The market reaction was to sell US shares and flee to havens. The downgrade is certainly a concerning development and another reason why Trump has to be respectful and mindful that the bond market isn’t completely comfortable with what he’s doing.
A dramatic fall in China’s industrial output and retail sales also hit sentiment. Energy and mining stocks compounded losses on concerns a drop in consumption could hit Chinese demand for Australian commodities. China’s home prices fell at a faster pace in April, signalling the property market slump remains a headache for policymakers as they fend off a tariff war with the US.
Iron ore giant BHP dropped 2.2% and diversified miner Mineral Resources dropped 9.7% despite announcing a successor to outgoing chairman James McClements. Coal miners also dragged, with New Hope tumbling 7.6% after downgrading its guidance for coal output and sales. Whitehaven Coal was off 4.3%. Profits were recycled into typically defensive utilities stocks and gold miners, buoyed by the higher gold price. Gold miners Evolution Mining and Northern Star were up 2.8% and 1.1%.
