NEW YORK, May 19 (Xinhua) -- U.S. stocks were little changed on Monday, as markets reacted to mounting concerns over the country's fiscal outlook following a credit rating downgrade and the advancement of a controversial tax-and-spending bill.
The Dow Jones Industrial Average rose 137.33 points, or 0.32 percent, to 42,792.07. The S&P 500 added 5.22 points, or 0.09 percent, to 5,963.6. The Nasdaq Composite Index increased 4.36 points, or 0.02 percent, to 19,215.46.
Seven of the 11 primary S&P 500 sectors ended in green, with health and consumer staples leading the gainers by adding 0.96 percent and 0.42 percent, respectively. Meanwhile, energy and consumer discretionary led the laggards by losing 1.55 percent and 0.27 percent, respectively.
Late Friday, Moody's Ratings downgraded the U.S. credit rating, stripping its last triple-A credit rating, citing persistent fiscal deficits and rising interest costs as key factors. Those concerns intensified after the House Budget Committee approved U.S. President Donald Trump's tax-and-spending bill late Sunday. Moody's cited "persistent, large fiscal deficits" for its downgrade.
"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration," the agency wrote, referring to the tax and spending bill making its way through Congress. U.S. financial health is likely to deteriorate as the government's debt and interest burden increase.
Experts seem not to worry about the long-term sustainability of U.S. finances. "There are no signs of any serious deficit restraint at this stage," noted Jim Reid, a strategist at Deutsche Bank.
"The Moody's downgrade of U.S. debt doesn't tell investors anything they don't already know about the U.S.'s fiscal woes," wrote Bank of America analysts in a note on Monday.
However, the downgrade and fiscal developments contributed to volatility in the bond market. The 10-year Treasury yield briefly climbed to 4.56 percent, its highest level in over a month, before pulling back to 4.45 percent as of 4:10 p.m. Eastern Daylight Time.
Trump added to the tensions over the weekend by criticizing Walmart for signaling price increases tied to tariffs. Walmart slumped 0.12 percent on Monday.
The Federal Reserve, which has held interest rates steady this year, remains cautious due to the uncertainty surrounding tariffs and fiscal policy. New York Fed President John Williams noted Monday that the economic outlook remains murky and that monetary policy direction may not become clearer for months.
Tech stocks, which have driven much of the recent market rally, traded mixed on Monday. Tesla dropped 2.25 percent after a 17 percent gain last week, while Apple lost about 1.17 percent. Nvidia also slipped, while Alphabet, Microsoft, Amazon, Meta and Broadcom posted some gains.
