By Caroline Veletkevitch
NEW YORK (Reuters) - Long-date debt yields rose, and concerns over U.S. debt burden and tax bills were high after Moody downgraded the country’s sovereign credit rating.
Major U.S. stock indexes recovered from early losses to the end until slightly higher.
Moody's Investor Service lowered the U.S. sovereign credit rating from the top three A rating late Friday, highlighting the country's deteriorating fiscal outlook.
U.S. President Donald Trump's massive tax bill was approved by a major congressional committee on Sunday. Republicans who control the U.S. House of Representatives will try to push the bill into pass this week.
The fiscal yields in 30 years reached a high of 18 months, and then these levels were removed. Investors are worried that the tax bill will increase the debt burden than previously expected.
The 30-year bond yield scored 3.7 basis points to 4.934% after exposure to 5.037% (the highest since November 2023). The yield on the benchmark US 10-year annotation rose 3 basis points to 4.469%, reaching 4.564% earlier, the highest since April 11.
"What Moody's doing is actually more symbolic than anything else. Other institutions have lowered their debts," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"Yes, yields are getting higher in the news ... but they are moving for other reasons, too," he added. "In general, the (stock) market isn't really reacting too much to Moody's announcement. Instead, it's a market that's emerging and is looking to consolidate its recent move."
Moody's downgrade follows similar moves from Fitch in 2023 and Standard & Poor in 2011.
U.S. Treasury Secretary Scott Bessent used a TV interview Sunday to dismiss the downgrade.
On Monday, some Fed officials commented on the U.S. market after their downgrades. New York Fed Chairman John Williams said at a meeting held by the New York Mortgage Bankers Association that investors "apparently" weigh future options.
Still, he said investors “have seen and continue to see the U.S. as “a good place including treasury, fixed income assets, so I think that narrative remains. ”
The Dow Jones Industrial Average rose 137.33 points, or 0.32%, to 42,792.07, the S&P 500 rose 5.22 points, or 0.09%, to 5,963.60, and the Nasdaq composite rose 4.36 points, or 4.36 points, or 0.02%, to 19,215.46.
The S&P 500 was registered for the fifth consecutive day on Friday.
MSCI's global stock scale rose 1.77 points, or 0.20%, to 882.39. The Pan-European STOXX 600 index rose 0.13%, while the European Ftseurofirst 300 index rose 2.80 points, or 0.13%.
MSCI's most extensive index in the Asia-Pacific region outside Japan fell 0.5%, with one bag of Chinese data showing the economy is in trouble.
The dollar fell, hitting lows over a week for the haven yen, Swiss franc and euro. To the yen, the dollar weakened by 0.55% to 144.82.
Trump's tariff war has weakened consumer sentiment, with analysts searching for revenue from Home Depot this week and targeting this week to update spending trends. Home Depot will report it before the opening clock on Tuesday.
Trump said on Saturday that Walmart should "eat tariffs" after the world's largest retailers said they must start raising prices due to taxes.
Atlanta Fed Chairman Raphael Bostic told CNBC on Monday that the central bank may only be able to lower interest rates by a quarter for the remainder of the year as people worry about increasing inflation due to higher import taxes.
Financial leaders of seven democracies will strive to perform uniformly this week when meeting this week on topics other than Trump’s tariffs, including economic security, Ukraine and AI collaboration.
Oil prices ended slightly higher as signs of a deadlock in negotiations with Iran about its nuclear program offset Moody's downgrade.
Brent crude futures rose 13 cents to price $65.54 a barrel, while the U.S. West Texas Intermediate crude rose 20 cents to price $62.69 a barrel.
Gold prices rose, with spot gold up 0.9% on $3,229.51 an ounce, while U.S. gold futures fell 1.5% to $3,233.5.
(Reported by Caroline Valetkevitch in New York, other reports by Samuel Indyk in London and Wayne Cole; edited by Richard Chang and Stephen Coates)