Morgan StanleyChief Investment Officer Mike Wilson pointed out that Moody's negative rating outlook may further suppress U.S. Treasury Bond and trigger upward pressure on U.S. bond yields. This is the key variable that currently has a substantial impact on the stock market. He stressed: "If the 10-year U.S. bond yield exceeds 4.5%, it will put some pressure on the stock market, but we tend to bargain hunting during the adjustment."
Tom Lee, director of research at Fundstrat, called this round of rating adjustments an "insignificant event" and made it clear: "If the market pulls back as a result, it is recommended to buy decisively."
Judging from the disk performance, although the three major stock indexes experienced a short-term decline in early trading on Monday, they quickly broke away from intraday lows. As of press time, the Dow Jones Industrial Average was down about 0.1%,S&P 500The index and the Nasdaq index both fell 0.3%. At the same time, the 10-year U.S. bond yield rose sharply by 9 basis points to 4.52%, and the 30-year U.S. bond yield also rose by more than 10 basis points, breaking through the 5% mark.
The rating adjustment occurred after the U.S. stock market closed last Friday, and Moody's became the third international rating agency to downgrade the U.S. sovereign credit rating since 2011. Previously, S&P downgraded the U.S. rating in 2011, and Fitch made the same decision in 2023. However, from historical experience, the rating downgrade has not formed a sustained guidance for the trend of the US economy or stock market.
Nicholas Colas, co-founder of DataTrek Research, wrote in a research report on Monday: "Historically, U.S. stocks have entered a long-term bull market stage after both S&P and Fitch downgrades, which shows that rating agencies' decisions do not effectively predict the future direction of the stock market."
Fundstrat's Lee also noted that Moody's downgrade didn't bring any "incremental information". "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."
It is worth noting that Moody's downgrade coincides with market sentiment shifting from cautious to optimistic. Last week, the United States and China reached a 90-day tariff suspension agreement, pushing U.S. stocks up sharply; In addition, the increase in corporate profit expectations has further boosted market confidence.
Wilson of Morgan Stanley has previously stressed that if the Federal Reserve starts to cut interest rates, it will provide another round of upward momentum for the stock market. However, in the context of interest rate cuts in the foreseeable future and Moody's rating downgrades pushing up bond yields, the continued recovery of corporate earnings revisions 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 key level of 6,100 points will depend on whether the earnings correction momentum can continue to increase, because at present, it seems that the easing of interest rates is still difficult to achieve."
