The stock market did experience a fall after the close on Friday, May 16, 2025, after Moody's downgraded the U.S. sovereign credit rating to Aa1 from Aaa. This downgrade, which stripped the U.S. of its last perfect credit rating, was released after the market closed and led to a post-market reaction.
Elaboration:
Moody's Downgrade:
On Friday, May 16, 2025, Moody's Investors Service downgraded the U.S. government's credit rating from Aaa to Aa1, citing concerns about rising government debt and interest costs.
Post-Market Reaction:
The downgrade was announced after the market closed, causing a drop in several market indexes and ETFs tracking the S&P 500, Nasdaq 100, and Dow Jones in post-market trading.
Specific Index Movements:
An ETF tracking the S&P 500 fell 0.6% in post-market trading. Dow Jones futures, QQQ, Broadcom, and Meta were also affected.
Market Sentiment:
The downgrade, while not entirely unexpected, may have sparked a bit of investor pause, especially after a strong market rally earlier in the week.
Impact on Treasury Yields:
The news also caused a rise in Treasury yields, with the 10-year note yield climbing to 4.49%.
Other Agencies:
Moody's is the last of the "big three" rating agencies (Moody's, Fitch, and S&P Global Ratings) to downgrade the U.S. credit rating, as Fitch and S&P had already done so previously.
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