Investing.com - U.S. stock futures edge lower, with traders eyeing the implications of Moody’s cut to its U.S. credit rating. Moody’s notes worries over the multi-trillion dollar U.S. debt pile, as lawmakers in Washington discuss a budget bill that some experts say could add even more to the country’s obligations. Elsewhere, markets are monitoring comments from Nvidia (NASDAQ:NVDA) CEO Jensen Huang at an event in Taiwan.
1. Futures slip
U.S. stock futures slid on Monday as investors assessed a decision by Moody’s to downgrade its rating of the country’s credit.
By 03:34 ET (07:34 GMT), the Dow futures contract had dropped by 345 points, or 0.8%, S&P 500 futures had declined by 66 points, or 1.1%, and Nasdaq 100 futures had fallen by 301 points, or 1.4%.
The main averages on Wall Street advanced for a fifth consecutive session on Friday, with sentiment bolstered by a U.S.-China trade agreement earlier in the week, which fueled hopes that President Donald Trump’s tariff agenda may not be as aggressive as initially feared.
Still, a closely-monitored gauge of U.S. consumer sentiment from the University of Michigan was weaker than anticipated in May, while one-year inflation expectations rose, as households fretted over the impact of the levies.
For the week, the blue-chip Dow Jones Industrial Average, benchmark S&P 500, and tech-heavy Nasdaq Composite all climbed for the week.
2. Bessent on Moody’s downgrade
The focus is now trained on Moody’s slash to the typically top-notch credit rating, with U.S. Treasury Secretary Scott Bessent saying the ratings were a "lagging indicator".
Speaking in an interview with NBC News’ "Meet the Press" on Sunday, Bessent added that he believes "that’s what everyone thinks" of the grades from credit agencies like Moody’s.
Lowering its rating of U.S. credit by one tick to "Aa1" from "Aaa", Moody’s noted on Friday that debt and interest in the country are "significantly higher than similarly rated sovereigns". The U.S. currently faces a $36.22 trillion debt pile, according to the Treasury Department.
In a statement, Moody’s added that "successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs". U.S. Treasury yields, which tend to move inversely to prices, moved higher late on Friday following the announcement.
3. Trump tax cut bill passes key panel
Against this backdrop, Republican lawmakers in the House of Representatives are racing to pass Trump’s so-called "big, beautiful" tax bill prior to May 26.
Despite ongoing internal disagreements over the legislation in the Republican party, this effort received a boost on Sunday, when the measure won approval from a key congressional committee.
Crucially, four hard-line GOP conservatives on the committee gave their assent to the bill moving forward, after having blocked its passage late last week. But one of those representatives told reporters that, while "progress" has been made, "we didn’t get nearly far enough".
Trump has called for an extension to his 2017 tax reductions and cuts to taxes on some forms of income, including tips, as well as a jump in spending on defense and border security. Some Republicans, however, are still asking for deeper decreases in programs such as Medicaid and the removal of tax credits for green initiatives previously introduced by Democrats.
The House may vote on the bill, which nonpartisan analysts have said could add $3 trillion to $5 trillion to the national debt over the next decade, later this week.
4. Nvidia CEO comments
Nvidia CEO Jensen Huang on Monday unveiled a host of new artificial intelligence technology -- both for enterprise and consumer applications -- when delivering the keynote address at the Computex AI exhibition in Taiwan.
Speaking for nearly two hours at the event in Taipei, Huang unveiled new AI data center technology, AI cloud and computing products for consumers, as well as AI software for robotic applications.
Huang touted NVLink Fusion, a platform that allows companies to more easily build out AI infrastructure. The platform opens up Nvidia’s servers to chips from other companies, which analysts said was a major development for AI technology.
Huang also announced small-form personal AI supercomputer products, new AI server technology, new AI agent software, and AI software to power robots. The host of new technologies will be developed in collaboration with several Nvidia partners, including Acer (TW:2353), MSI, Gigabyte, Marvell (NASDAQ:MRVL), MediaTek, Qualcomm (NASDAQ:QCOM), and Fujitsu (TYO:6702).
Huang’s address showed Nvidia putting all its weight behind maintaining its lead in developing AI technology, with the company having ballooned in value over the past two years thanks to the fast-growing industry.
While some doubts over AI chip demand have emerged in recent months, markets broadly expect Nvidia to maintain its edge, even as the company grapples with new export restrictions on sales to China. Recent commitments from major U.S. AI spenders -- chiefly Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL) -- to keep spending hundreds of billions on AI infrastructure, point to sustained near-term demand for Nvidia.
5. Oil slumps
Oil prices traded lower Monday, handing back some of the previous week’s gains as traders digested mixed Chinese economic data.
At 03:34 ET, Brent futures dropped 0.5% to $65.10 a barrel, and U.S. West Texas Intermediate crude futures fell 0.5% to $61.65 per barrel.
China’s industrial production rose more than anticipated in April, with factory activity holding up well despite pressure from heightened U.S. trade tariffs on exports.
However, domestic demand showed signs of weakness, as retail sales for the month came in below expectations.
Traders were also cautious following Moody’s downgrade of its U.S. credit rating. The U.S. is the world’s biggest oil consumer.