Moody's downgrades US credit rating, how do Wall Street experts view this?

On Friday, Moody's Corporation downgraded the United States' sovereign credit rating from the highest Aaa to Aa1, citing increasing government debt and interest burden as reasons. This move means that the United States' sovereign debt has been removed from the "top credit" ranks by all three major rating agencies. In response to this news, an exchange-traded fund (ETF) tracking the S&P 500 index fell 1% in after-hours trading, while the Nasdaq 100 ETF (QQQ.US) dropped 1.3% after hours, and US Treasury bond yields rose. As Moody's Corporation's downgrade exacerbates the risks facing the US market due to President Donald Trump's unpredictable tariff policies putting pressure on economic prospects, despite the S&P 500 index bouncing back from last month's lows, many Wall Street professionals remain skeptical of this rally as the impact of tariffs on business and consumer confidence may start to show in economic data in the coming months. Below are the opinions of Wall Street experts on Moody's Corporation's downgrade of the US sovereign credit rating: Eric Beiley, Executive Director of Steward Partners Wealth Management, said, "This is a warning signal. The US stock market is about to peak after a much-anticipated rebound. Moody's Corporation downgrading the credit rating might ultimately prompt fund managers to take profits after the market's sharp rise over the past month." Ivan Feinseth, Chief Investment Officer at Tigress Financial Partners, said, "US Treasuries are considered the safest investment in the world. When the US credit rating is downgraded, the impact on other sovereign debts could be more negative as the US serves as a benchmark. It remains to be seen how this will affect the stock market in the coming weeks, but given the recent strong market rally, investors may remain cautious." Dave Mazza, CEO of Roundhill Investments, said, "While Moody's Corporation has officially announced this news, the market may have already anticipated a deterioration in the US credit situation. Unlike the impact of the downgrade of the US credit rating by S&P in August 2011, this downgrade is occurring in a situation where the market is already cautious about fiscal imbalances and tariff risks - which means that the impact of this downgrade on the stock market may be smaller than initially implied by the news reports." Thomas Thornton, Founder of Hedge Fund Telemetry LLC, said, "This is unfavorable for the overall US market. It's not as shocking as when S&P downgraded the US AAA rating in 2011, as the market was already on shaky ground then. Bond market rates are rising in the final hour, and the risk of rates rising higher, faster, and more dramatically has always been my biggest concern." Dan Greenhaus, Chief Market Strategist at Solus Alternative Asset Management LP, said, "The US is facing a huge budget deficit in peacetime, something we may have never seen in our lifetime. But we all know this. Moody's Corporation hasn't told us anything new." Max Gokhman, Deputy Chief Investment Officer at Franklin Templeton Investment Solutions, said, "The downgrade of the US sovereign credit rating is not surprising, as the US Congress is only going to accelerate its generous fiscal plans. Additionally, as large investors start gradually replacing US treasuries with other safe haven assets, the cost of borrowing will continue to rise. Unfortunately, this could lead to a dangerous spiral of rising bond yields, further downward pressure on the US dollar, and reduced attractiveness of the US stock market." Michael O'Rourke, Chief Market Strategist at JonesTrading, said, "I expect the US stock market to experience a profit-taking phase after a strong rebound. When S&P downgraded the US rating in 2011, US Treasuries were initially sold off, but then safe haven buying emerged, leading to a rebound in US Treasury prices." Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, said, "I don't think this will change the market environment, but it does provide investors with an excuse to take profits. However, it does highlight the potential increase in deficits, prompting the market to focus more on the current discussions about extending tax legislation."