S&P 500 Slides Lower on Higher Bond Yields, on the Cusp of Ending 6-Day Streak

Published: May 20, 2025 by Omor IE

Key Points

Treasury yields are up slightly today.
This is mainly why the stock market is down this morning.
Higher yields may be linked to the credit rating downgrade by Moody’s on Friday.
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The stock market may be on the cusp of ending a 6-day winning streak due to stocks slipping today. That said, the market could simply be repeating what it has done several times in recent sessions: stocks go lower early on, but pull off a recovery by the end of the trading session. Today could be similar.

The recent downgrade of the U.S. credit rating by Moody’s sagged markets momentarily, but the S&P 500 still closed green on Monday. Slightly higher yields today are also somewhat tied to this downgrade.

Bond yields have turned into the market’s biggest concern today. Treasury bills have seen slight declines, but Treasury bonds have gone up. The 20-year Treasury is up 3 basis points, and the same is the case for the 30-year Treasury. Earlier, the 30-year bond crossed 5%, and the 10-year was up 6 basis points. Foreign bonds are up much more.

Here’s a market update as of 10:45 AM (ET) today.

The S&P 500 is down 11.91 points, or 0.2%.
The Nasdaq Composite is down 66.29 points, or 0.34%.
The Dow Jones Industrial Average is down 43.74 points, or 0.1%.

President Donald Trump’s Comments

President Donald Trump arrived at Capitol Hill over the “Tax-Cutting Bill” and made the following comments:

“We have a unified party, it’s not a question of holdouts.”
“The economy is roaring.”
“A couple of republicans are grandstanding.”
“Alternative to not passing tax bill is massive tax hikes.”
“We will have a very good discussion.”
“We’re not cutting anything meaningful.”
“I am not changing medicaid, medicare, social security.”
“[State and Local Tax] SALT is a very “interesting thing”.”
“I’m a fiscal hawk.”

According to an Axios report, the president warned House Republicans not to “f— around” with Medicaid.

Rate Cuts

Yields have mostly moved higher due to concerns that the Federal Reserve will be holding up interest rates higher for longer. Currently, the market sees the chance of a 25-basis-point cut at the next FOMC meeting in June at just 9%.

Many Fed officials have said earlier that they are waiting to see the full impact of tariffs on inflation before moving ahead with a cut. If the hard data comes in cooler, the Fed could make do with two rate cuts as many had expected earlier this year. Otherwise, there may be just one cut, or none at all.

Wall Street is waiting for more data to come in, such as the unemployment claims data on Thursday this week. G-7 finance ministers and central bank governors are also meeting in Braniff, Canada.