May 19, 2025

The Pulse: Global Economic and Market News for Monday, May 19, 2025

Global markets faced heightened volatility on May 19, 2025, after Moody’s Ratings downgraded U.S. government debt, stripping it of its top credit rating. Investors responded with initial risk aversion, sending stocks, bonds, and the dollar lower, but equities rebounded later in the session as dip buyers returned. The downgrade, citing persistent fiscal deficits and rising debt, added to ongoing concerns about global growth, trade policy, and inflation.

U.S. Markets React to Credit Downgrade

• The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite opened lower, with the S&P 500 and Nasdaq down as much as 1.1% and 1.5% in early trading. The Dow slipped 0.2%26.

• By the end, the S&P 500 demonstrated resilience, managing a small gain and extending its winning streak to six days. This suggests that investors are looking past the downgrade and are confident in the market's ability to recover.

• The yield on the 10-year Treasury note climbed to 4.52%, its highest in over a month, while the 30-year yield surpassed 5% for the first time since November 2023, reflecting selling in government debt as prices fell124.

• The U.S. dollar index dropped 0.8% as all major currencies advanced against the greenback. Gold rose 1.3% to $3,230 an ounce, and oil prices slipped 0.2% to $62.35 per barrel as investors sought safe havens12.

Technology and Corporate Movers

• Major technology stocks, which had led to recent gains, were mainly lower. Tesla fell 4%, Apple dropped about 3%, and Nvidia, Amazon, Alphabet, Meta Platforms, and Broadcom all lost ground. Microsoft was a notable exception, inching higher.

• Palantir Technologies and Advanced Micro Devices each declined about 2%2.

• Inflows into digital asset investment products totaled $785 million last week, with Ethereum leading and Bitcoin slowing, reflecting mixed sentiment in the crypto market7.

Global and Economic Context

• The Moody’s downgrade cited “persistent, large fiscal deficits” and a lack of progress in addressing long-term debt, which has put the U.S. rating one notch below the top tier24.

• The Conference Board’s Leading Economic Index (LEI) for the U.S. fell sharply by 1.0% in April, the most significant monthly drop since March 2023, signaling growing pessimism among consumers and business leaders. The Conference Board forecasts U.S. GDP growth of 1.6% in 2025, down from 2.8% in 2024, with the bulk of tariff impacts expected in Q311.

• S&P Global noted that global growth slowed to its lowest in 18 months in April, with exports falling at the sharpest rate in over two years. The temporary U.S.-China tariff pause has buoyed sentiment, but ongoing uncertainty and surviving tariffs are expected to dampen growth and raise inflation pressures, a key insight for investors.

• The IMF recently cut its U.S. growth forecast 2025 to 1.8% and China’s to 4%, highlighting the persistent drag from trade tensions and policy uncertainty9.

Sector and International Highlights

• European and Asian stock markets opened lower, with the Stoxx 600, FTSE 100, and CAC 40 all declining, while government bond yields rose in both the U.K. and eurozone14.

• Bond yields increased in the U.K. as the EU and the U.K. reached a new post-Brexit agreement. In the U.S., President Trump criticized Walmart for raising prices despite citing tariffs, while Walmart reiterated its commitment to keeping prices as low as possible despite rising costs4.

• Digital assets saw continued inflows, with Ethereum benefiting from recent upgrades and leadership changes, while Solana recorded outflows7.

Outlook

• Investors are watching for upcoming flash PMI data for May, which will provide fresh insights into business conditions following the recent tariff truce and credit downgrade3.

• The Conference Board notes that while the LEI’s decline is a warning signal for growth, it has not yet triggered a recession indicator. However, consumer sentiment remains at multi-decade lows, and global public debt is rising, adding to the uncertain outlook911.

Disclosure

This article is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any securities. All information is based on publicly available sources as of May 19, 2025. The author holds no positions in the securities mentioned. Readers should consult financial professionals before making investment decisions. For official disclosure guidance, refer to the U.S. Securities and Exchange Commission (SEC).

Sources

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The Pulse: Global Economic and Market News for Monday, May 19, 2025

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