The markets have recouped most of their losses, with the SPX now down a modest 0.03%. JPMorgan CEO Jamie Dimon believes the risks around the threat of both inflation and deflation have yet to surface in stock market values. He said at an event in New York,
“We have huge deficits; we have what I consider almost complacent central banks. You all think they can manage all this. I don’t think” they can…“My own view is people feel pretty good because you haven’t [yet] seen effective tariffs…The market came down 10%, [it’s] back up 10%; that’s an extraordinary amount of complacency.”
Ray Dalio, founder of Bridgewater Associates, reportedly raised a flag that Moody’s downgrade of the U.S. sovereign credit rating misses a crucial point regarding the vulnerability of U.S. Treasuries. According to Dalio, the credit agency’s analysis fails to account for the inherent risk of the federal government resorting to money printing to service its massive debt.
While Treasury yields rise, the markets remain under pressure, including a 0.17% decline in the SPX ETF.
This week, the market’s focus pivots to corporate earnings, with reports due from major players like Home Depot (NYSE: HD), Target (NYSE: TGT) and TJX Companies (NYSE: TJX). Notably, TJX stock has already climbed 11% this year so far. Comparable store sales figures will be under close examination amid ongoing high interest rates as well as signs of cooling inflation.
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The markets are narrowing their declines in the face of a U.S. debt downgrade by one of the credit rating agencies. Moody’s lowered its view of U.S. debt by a single notch to to Aa1, down from the highest possible rating. Moody’s blamed the persistent budget deficit and high interest rates, a view challenged by President Trump, who affirmed global confidence in the U.S. economy. The credit downgrade adds insult to injury following a week in which the S&P 500 advanced 5%.
Atlanta Fed President Raphael Bostic told CNBC he predicts one interest rate cut in 2025 as the economy continues to stave off a recession. The central bank has tipped its hand to a possible two rate cuts this year.
Today’s credit downgrade sent Treasury yields higher, with the 30-year Treasury surpassing the 5% threshold, and weighed heavily on equities. While the SPX ETF is currently down slightly, the three major averages are showing signs of resilience, paring back their earlier losses as the morning progresses.
The broader technology sector is currently down 1.4%. The prominent Magnificent Seven stocks are mostly in the red, including a 2.8% decline in Apple (Nasdaq: AAPL | AAPL Price Prediction) stock amid ongoing regulatory scrutiny of its proposed AI partnership with China’s Alibaba.
Here’s a look at the performance as of morning trading:
Dow Jones Industrial Average: Down 44.18 (-0.10%)
Nasdaq Composite: Down 103.54 (-0.54%)
S&P 500: Down 20.36 (-0.34%)
Walmart (NYSE: WMT) is down 2.3% after announcing potential price increases due to tariffs, a move countered by Treasury Secretary Scott Bessent’s suggestion that the retailer will “absorb some of the tariffs.”
Palantir Technologies (Nasdaq: PLTR) has seen a 3.8% decline but remains close to its recent high of $130.18.
Novavax (Nasdaq: NVAX) is a significant gainer, soaring 25.9% following regulatory approval for its COVID-19 vaccine.
Reddit (NYSE: RDDT) shares are lower by 4.4% on the back of an analyst downgrade.
Take-Two Interactive Software (Nasdaq: TTWO) is bucking the trend, climbing 3.7% after a price target increase from Wedbush Securities.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
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