New York. Wall Street kicked off the week on a sour note, with U.S. stocks, bonds, and the dollar all under pressure amid a growing “Sell America” sentiment.

Moody’s Ratings downgraded the sovereign credit outlook for the United States, citing Washington’s failure to control its ballooning deficits. The S&P 500 fell 1 percent in early Monday trading, while the Dow Jones Industrial Average dropped 282 points, or 0.7 percent. The Nasdaq Composite slid 1.2 percent.

Moody’s was the last of the three major rating agencies to strip the US of its pristine "Aaa" rating, forecasting federal deficits could reach nearly 9 percent of GDP by 2035, up from 6.4 percent in 2024. The downgrade underscores concerns over rising entitlement spending, surging interest payments on debt, and weak tax revenue. The agency also flagged the potential $4 trillion cost of extending Trump-era tax cuts, a key Republican policy priority.

Adding to the turmoil, House Republicans pushed through a weekend Budget Committee vote on a major tax and spending package. However, deep divisions remain, particularly over proposed cuts to Medicaid and clean energy programs. The uncertainty unsettled markets, pushing the dollar down to 144.96 yen and sending the yield on the 10-year US Treasury up to 4.55 percent from 4.44 percent on Friday.

Capital One and Discover completed their long-awaited merger on Sunday, though Capital One shares dipped slightly in premarket trading. Meanwhile, attention turns to retail earnings this week, with Target, Home Depot, Lowe’s, and TJX set to report. Investors are keen to see whether more retailers will follow Walmart’s lead in hiking prices amid continued cost pressures from tariffs.

Trump’s tariff policies remain a source of volatility. While some relief came from a temporary 90-day suspension in US-China tariffs last week, the unpredictable nature of trade announcements continues to rattle investors, businesses, and consumers alike. Walmart, for instance, said last week that higher prices are “inevitable” despite efforts to absorb cost increases.

Outside the US, global markets mirrored the downturn. European indexes edged lower, with France’s CAC 40 down 0.8 percent, the FTSE 100 off 0.4 percent, and Germany’s DAX nearly flat. Asian markets also slid, as weaker-than-expected Chinese economic data raised concerns about slowing domestic demand. Hong Kong’s Hang Seng lost 0.1 percent, and Alibaba shares tumbled over 3 percent on reports of US scrutiny over a potential AI partnership with Apple.

In Japan, the Nikkei 225 declined 0.7 percent, while South Korea’s Kospi slipped 0.9 percent. Australia and Taiwan also posted losses. Oil prices joined the sell-off, with US crude down 58 cents to $61.39 a barrel, and Brent falling to $64.83.

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