9.55am: Nasdaq and Russell 2000 lead fallers
The Nasdaq and the Russell 2000 led Wall Street lower to start the week, but all the major indexes were quickly cutting their losses.
In initial trades, the Nasdaq fell over 0.8% and the S&P 500 more than 0.5%, with the Dow Jones down 0.2%.
The small-cap Russell 2000 dropped 1.2%.
Among the major S&P fallers, Tesla was down 4%, Palantir 3.7% lower and Apple fell 2.8%.
Moderna, UnitedHealth and Dollar General topped the leaderboard.
8am: Nasdaq seen heading Wall Street reverse after Moody's downgrade
Wall Street shares are set to reverse half their gains from last week after bond markets reacted to Moody's downgrading its rating of US government debt, and the Trump administration's tax cut bill moved closer to being passed.
S&P 500 futures were down 1.1% and those for the Nasdaq down 1.5%, while Dow Jones futures fell 0.6%.
Moody’s revealed its downgrade after the close on Friday, giving its reasoning of the large fiscal deficits and rising interest costs in the US, which were down to "successive US administrations and Congress" all failing to address the problem, with the current budget proposals doing nothing to reverse this trend.
Moody’s joined both Fitch and S&P, which cut their ratings in 2023 and 2011.
Meanwhile, Trump's sweeping tax cut bill passed a key Congressional committee stage on Sunday.
Treasury Secretary Scott Bessent said over the weekend the downgrade was a "lagging indicator".
He also chivvied potential trade partners to come up with "good faith" deals or take the consequences, and suggested that the US only had the bandwidth to deal with its top eighteen trade partners, leaving others potentially in limbo.
Over the weekend, President Trump urged retailer Walmart to absorb tariffs and avoid passing the costs onto consumers with higher prices.
His comments came ahead of earnings this week from retail chains Home Depot, Lowe’s and Target.
The Moody's cut and bond market reaction underline concerns around the budget deficit, said market analyst Neil Wilson at Saxo.
"It’s a fact that the 30yr Treasury yield has since broken a key level at 5% and the 10yr has risen above 4.5%, which is clearly linked to worries about a tax bill and ‘erratic’ economic policy...on which note Bessent also said that US tariffs that are on pause for 90 days could be quickly reimposed if countries don’t negotiate in good faith."
This brings tariff risks back into focus, Wilson said, "and perhaps that is why stocks are down today".The President also announced his intention hold calls about ending the war in Ukraine.
Trade Nation analyst David Morrison said there was little in today’s economic calendar, apart from "a stack of speeches" from Federal Reserve committee members.
"Friday’s downgrade provided the catalyst for a pullback across the US majors. But stock indices remain very overbought, even as they were extremely oversold just over a month ago. That would suggest prices have further to fall over the short-term," he said.