Author: Hamza

Published on: May 20, 2025
NEW YORK – Global investors are pulling out of American markets again after a major credit warning from Moody’s, which downgraded the U.S. credit rating late Friday—its first such action in more than a century. The move has reignited fears of a renewed ‘Sell America’ wave on Wall Street.Moody’s was the last of the three major credit agencies to strip the U.S. of its AAA rating, citing the country’s escalating debt crisis and political gridlock in Washington as the key reasons. The downgrade sent shockwaves through financial markets on Monday morning.

Market Panic: Stocks, Dollar, and Bonds Drop

Futures markets reacted sharply:

  • Dow futures fell 350 points (-0.8%)
  • S&P 500 futures dropped 1.2%
  • Nasdaq futures plunged 1.6%

Investors also dumped U.S. Treasury bonds, sending the 10-year yield up to 4.5% and 30-year yields past 5%. The U.S. dollar slipped nearly 0.9% against a basket of global currencies, while gold surged 1.4% to a record $3,232 per ounce as traders sought safer alternatives.

Trump Policies & Rising Debt Fuel Uncertainty

Wall Street had been riding a rollercoaster in 2025. Early-year optimism over President Trump’s tax cuts and deregulation pushed markets to record highs in February. But fears over his aggressive trade strategies quickly turned that momentum into panic, triggering the first wave of Sell America in April.

The recent Moody’s downgrade has brought those fears back with force.

Treasury Secretary Scott Bessent attempted to calm markets over the weekend, calling the downgrade “outdated.” He insisted Trump’s proposed “big, beautiful bill” of tax cuts would boost GDP enough to reduce the debt burden. However, analysts remain unconvinced.

“Budget-busting revenue estimates for the bill appear to be the problem,” said Chris Rupkey, chief economist at FwdBonds. “The last time this happened in 2011, the stock market fell 7% the following Monday.”

America’s Debt Crisis Reaches Breaking Point

The U.S. debt-to-GDP ratio now stands at 123%, compared to 92% during the 2011 downgrade by S&P. Experts warn that the Moody’s move is a wake-up call.

“For anyone waiting for a red flag about America’s financial path, this is it,” said Michael Peterson, CEO of the Peter G. Peterson Foundation.

What Another ‘Sell America’ Could Mean

Should a new wave of Sell America take hold, markets could face intense volatility. In the last round, investors pulled money from U.S. equities and bonds, favoring foreign markets and safe-haven assets like gold.

If that trend returns, expect continued pressure on the dollar, rising bond yields, and possible stock market declines.

Tariffs Threat Looms Again

Adding to the turmoil, Bessent warned Sunday that Trump’s “reciprocal tariffs” could rise up to 50% if key trading partners fail to strike deals with the U.S. by summer. This echoes Trump’s “Liberation Day” tariffs from April, which had previously rattled global markets.

“President Trump has made it clear: negotiate in good faith or face steep penalties,” Bessent said.