[New York Stock Market Close] Broad Decline as Market Pauses: S&P 500 Drops 0.39%

# U.S. Stocks Decline Following Moody’s Credit Downgrade Amid Trade Negotiation Focus **New York—** Major U.S. stock indices ended lower on the 20th (local time), with Wall Street experiencing a pullback. Investors used Moody’s recent downgrade of the U.S. credit rating as an opportunity for profit-taking following a sustained market rally. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell by 114.83 points, or 0.27%, closing at 42,677.24. The S&P 500, which tracks larger-cap stocks, decreased by 23.14 points, or 0.39%, settling at 5,940.46. The tech-heavy Nasdaq Composite Index dropped 72.75 points, or 0.38%, ending at 19,142.71. # Market Adjustments Post-Moody's Downgrade of U.S. Credit Rating While Moody's downgrade of the U.S. sovereign credit rating from ‘Aaa’ to ‘Aa1’ last week wasn't considered significantly alarming by many analysts, it provided the market with a reason to pause its recent rally. The downgrade, announced after market hours on May 16, gave traders a pretext to take profits after the S&P 500’s six-session winning streak. Garrett Melson, portfolio strategist at Natixis Investment Managers, stated, “After such a notable rally, the market seems to be taking a breather for a justified period of consolidation. What we are witnessing now is this adjustment process coupled with underlying market volatility.” # Trade Negotiations Under Market Scrutiny Investors continued to closely monitor U.S. trade negotiations with major partners. The U.S. is implementing a 10% base tariff on nations excluding China for a 90-day period while temporarily reducing tariffs on Chinese goods from 145% to 30%. This move stimulated cautious optimism across the market. St. Louis Federal Reserve President Alberto Musalem cautioned that tariffs could weaken U.S. economic activity and the labor market. However, he added that if trade negotiations significantly ease tensions, the Federal Reserve could balance inflation at its 2% target without drastically affecting employment. Bill Nosie, investment officer at U.S. Bank Wealth Management, noted, “We’ve seen sharp drops due to initial tariff announcements, followed by strong rebounds from relaxed implementations. Right now, negotiations are ongoing, and investors are waiting for clear direction.” He described the current sentiment as one of “cautious optimism, but still lacking clear clarity.” # Short-Term Cooling Period Predicted by Market Strategists Matt Maley, chief market strategist at Miller Tabak, acknowledged the stock market's substantial momentum, cautioning against potential overheating. “While there’s no denying the market’s strong momentum, we’re entering a stage where a short-term correction is very plausible,” Maley said. However, he added that, “Unless this pullback turns into a severe reversal, we could very likely see the market retest all-time highs soon.” # Policy Deadlock in Congress Adds Market Pressure In political developments, President Donald Trump faced opposition from key Republican members in the House over changes to state and local tax deduction limits (SALT cap). Their resistance could hinder Trump’s desired tax overhaul, which he hoped to pass before Memorial Day weekend. # Bond Yields Increase as Long-Term Treasury Prices Fall In the bond market, U.S. Treasury yields climbed as prices dropped. The 10-year Treasury yield rose for a second day, reaching 4.479% by 3:00 p.m. ET. The 30-year bond, which breached 5% the previous day, stood at 4.967%. Bond yields and prices move inversely to each other. # Focus Stocks: Tesla, D-Wave Quantum, and Vaccine Makers Tesla increased by 0.51% after CEO Elon Musk reaffirmed his commitment to remain at the company for at least five more years and reduce political campaign contributions. D-Wave Quantum, a quantum computing firm, saw a surge of 25.93% after unveiling its latest computing system, Advantage 2. Vaccine stocks gained robustly after the U.S. Food and Drug Administration (FDA) issued updated regulatory guidelines for COVID-19 booster vaccines. Moderna surged 6.06%, while Pfizer climbed 2.26%. The new rules will apply evidence benchmarks differently based on the severity of risk factors. # Looking Ahead: Federal Reserve Speakers Scheduled Investors are now focused on upcoming public statements from Federal Reserve officials scheduled for May 21. Earlier on May 20, Richmond Fed President Thomas Barkin and Board Governor Michelle Bowman addressed market participants. The CBOE Volatility Index (VIX), often referred to as Wall Street’s "fear gauge," dipped 0.28% to close at 18.09, reflecting a slight decline in market anxiety. --- **Image Caption: Traders on the floor of the New York Stock Exchange (NYSE). [Photo by Reuters, sourced via Newsis] May 21, 2025.**