Morgan StanleyMike Wilson, chief investment officer, pointed out that Moody's negative rating outlook may further suppress the US Treasury Bond and trigger upward pressure on US bond yields, which is the key variable that has a substantial impact on the stock market at present. He emphasized: "If the yield of 10-year U.S. bonds exceeds 4.5%, it will put a certain suppression on the stock market, but we tend to buy dips in the adjustment."
Tom Lee, head of research at Fundstrat, for his part, labeled this round of rating changes a "insignificant event" and made it clear: "Should the market pull back as a result, a decisive buy is recommended."
Judging from the disk performance, although the three major stock indexes fell for a short time in early trading on Monday, they quickly left the intraday low. At press time, the Dow Jones Industrial Average was down about 0.1%,S&P 500The index and the Nasdaq both fell 0.3%. At the same time, the yield of the 10-year U.S. bond rose sharply by 9 basis points to 4.52%, and the yield of the 30-year U.S. bond also rose by more than 10 basis points, breaking through the 5% mark.
Moody's became the third international rating agency to downgrade the U.S. sovereign credit rating since 2011 after the shares closed last Friday. This follows a downgrade of the US by S&P in 2011 and a similar decision by Fitch in 2023. However, from historical experience, the downgrade did not form sustained guidance for the U.S. economy or stock market movements.
Nicholas Colas, co-founder of DataTrek Research, wrote in a Research report on Monday: "Historically, both the ratings of S&P and Fitch were downgraded, and then U.S. stocks entered a long-term bull market stage, which shows that the decisions of rating agencies cannot effectively predict the future direction of the stock market."
Fundstrat's Lee also noted that Moody's did not bring any "incremental information" from this downgrade. "The U.S. fiscal deficit mentioned by Moody's has long been a market consensus, and this is not an 'accident' at all," Li bluntly said. "I believe no large bond institution will be surprised by this."
Notably, Moody's downgrade coincides with a shift in sentiment from cautious to optimistic. Last week, the United States and China reached a 90-day tariff suspension agreement, which pushed U.S. stocks up; In addition, the upward adjustment of corporate profit expectations further boosted market confidence.
Morgan Stanley's Wilson has previously stressed that if the Federal Reserve starts cutting interest rates, it will provide another round of upward momentum for the stock market. However, under the background that interest rate cuts are far away and Moody's rating downgrade pushes up bond yields, the continuous recovery of corporate profit correction has become the core driving force supporting the stock market.
He said: "In the short term, whether the S&P 500 can break through the 6100 key level will depend on whether the profit correction kinetic energy can continue to increase, because at present, it seems that the easing of interest rates is still difficult to achieve."
