After a sharp morning selloff, markets rebound on Monday, lifting the major averages into positive territory by the close. The Dow outperformed, driven by a sharp rebound in UnitedHealth, while the S&P 500 notched a sixth straight gain and the Nasdaq finished little changed. Early jitters from Moody’s downgrade of the US credit rating gave way to renewed risk appetite as Treasury yields backed off their highs. Despite lingering policy uncertainty and cautious tech sentiment, investors showed a willingness to stay engaged, betting that resilience in select sectors and improving trade dynamics could help sustain the recent recovery.

Key Takeaways:

  • Dow Leads Gains with Rebound in UnitedHealth: The Dow Jones Industrial Average climbed 137.33 points, or 0.32%, to close at 42,792.07. UnitedHealth surged 8.2% after last week’s steep losses, helping to offset broader market nerves tied to rising bond yields and Moody’s downgrade. 
  • S&P 500 Extends Winning Streak to Six Sessions: The S&P 500 inched up 0.09% to finish at 5,963.60, continuing its longest rally of the year. The index briefly traded nearly 1% lower in morning action before stabilising, supported by a pullback in Treasury yields from session highs.
  • Nasdaq Ends Flat as Tech Stocks Underperform: The Nasdaq Composite edged up just 0.02% to end at 19,215.46. Heavyweights like Tesla and Palantir fell over 2%, dragging on performance even as broader markets recovered. 
  • Europe Mixed as Markets Digest UK-EU Pact and Inflation Outlook: European equities closed largely flat, with investors balancing political developments against inflation forecasts. The FTSE 100 added 0.17% after Britain and the EU reached their most substantial post-Brexit agreement, covering trade, defence, food exports, and fishing. The DAX gained 0.70% while France’s CAC 40 dipped 0.04%. Italy’s FTSE MIB underperformed, sliding 1.20% amid weak sentiment in domestic sectors. UK long-term gilt yields spiked over 8 basis points before easing, reflecting rate sensitivity. Meanwhile, the European Commission projected euro area inflation to ease to 2.1% in 2025 and 1.7% in 2026, reinforcing expectations of policy flexibility from the ECB.
  • Asia Declines as China Misses Estimates and Downgrade Adds Pressure: Asia-Pacific markets moved broadly lower on Monday as investors reacted to weak Chinese retail sales and Moody’s US credit downgrade. China’s retail sales rose just 5.1% year-on-year in April, below the expected 5.5%, while industrial output came in stronger at 6.1%. Still, momentum appeared to be slowing from March’s readings. Hong Kong’s Hang Seng fell 0.05%, mainland China’s CSI 300 slipped 0.48%, and Japan’s Nikkei lost 0.68%. South Korea’s Kospi and Kosdaq dropped 0.89% and 1.56% respectively. Australia’s ASX 200 lost 0.58% ahead of the RBA’s meeting. Thailand grew 3.1% in Q1, beating expectations but lowering its annual forecast, further reflecting cautious regional sentiment.
  • Oil Rises as US-Iran Talks Stall Again: Oil prices edged higher, with Brent crude settling at $65.54 and WTI closing at $62.69. A stalled nuclear dialogue between the US and Iran helped support prices, as Iranian officials dismissed calls to halt uranium enrichment. Despite the Moody’s downgrade and soft macro data, energy markets remained resilient. Both benchmarks had gained over 1% last week and are holding those levels amid supply-side uncertainties.
  • Treasury Yields Spike Then Ease as Downgrade Sinks In: The 30-year yield briefly topped 5.03% before ending at 4.921%, while the 10-year hit 4.459%. Moody’s lowered the US credit rating to Aa1 from Aaa, citing structural deficit issues and rollover costs. Early fears sparked a selloff in bonds, but dip buying later helped stabilise prices. The 2-year yield dipped slightly to 3.972%, signalling some curve flattening as traders weigh near-term risks.

FX Today:

  • EUR/USD Attempts to Stabilise Above 1.1200 After Choppy Slide: EUR/USD rose 0.66% on Monday to finish at 1.1235, recovering from recent weakness that saw the pair dip as low as 1.1169. The 50-day simple moving average at 1.1114 acted as a reliable support level, halting the pullback and giving bulls a fresh foothold. Price action has been volatile since April’s peak at 1.1627, but the broader trend remains constructive with the 100-day and 200-day SMAs at 1.0770 and 1.0800 continuing to slope higher. A break above 1.1350 would shift momentum decisively back to the upside. If the pair fails to hold above 1.1200, support near 1.1114 and then 1.1000 could be retested. Traders remain focused on eurozone inflation expectations and ECB guidance for further cues.
  • GBP/USD Holds Above Key SMAs as Buyers Eye 1.3400 Break: GBP/USD advanced 0.53% to close at 1.3354 on Monday, maintaining bullish momentum amid a resilient macro backdrop. The pair has remained well-supported above its 50-day SMA at 1.3125, helped by steady accumulation since the March low. Long-term support from the 100-day and 200-day SMAs at 1.2811 and 1.2876 reinforces the bullish structure. Upside targets include 1.3400 initially, followed by 1.3550. A failure to break higher could see price revisit the 1.3250–1.3200 zone. Sentiment remains positive as long as price holds above the 50-day average, with the pound also benefiting from improved post-Brexit relations between the UK and EU.
  • USD/JPY Fails to Hold 145.00 as Reversal Risks Deepen: USD/JPY declined 0.49% on Monday to settle at 144.91, breaking below the key 145.00 psychological level. The pair came under renewed pressure after failing to breach the 50-day SMA near 146.06, marking a potential shift in short-term direction. Momentum has weakened since peaking above 152.00 in April, with sellers gaining confidence amid lower highs and resistance near 145.50–146.50. Support lies at 144.00 initially, followed by 142.60 and 141.80. A close below these levels may confirm a broader reversal and open the door toward 140.60. Bulls need to reclaim 146.00 to halt the current correction and revive upward potential.
  • AUD/USD Holds Below 200-Day SMA as Bulls Test Strength: AUD/USD rose 0.80% to 0.6452 on Monday, extending its slow recovery from April lows around 0.6000. Despite the upward push, the pair remains trapped just below the 200-day SMA at 0.6455, a key technical barrier. The 50-day and 100-day SMAs at 0.6333 and 0.6299 are trending higher and now serve as near-term support. Price has repeatedly stalled near current levels, reflecting market hesitation to confirm a full reversal. A break above 0.6455 could accelerate gains toward 0.6650. However, failure to hold above 0.6400 may trigger a renewed drop to 0.6320 or 0.6250. Sentiment stays cautiously optimistic pending clearer direction.
  • Gold Rebounds Near 50-Day SMA, Eyes Fresh Upside: Gold climbed 0.96% on Monday to close at $3,232, staging a strong recovery from last week’s dip and bouncing off the 50-day simple moving average at $3,169. The metal found renewed support as global uncertainty and technical buying lifted sentiment. While prices remain below the April peak above $3,500, the current rebound suggests that the broader uptrend is still intact. Key resistance lies at $3,300 and then $3,370, both of which must be cleared to reignite bullish momentum. On the downside, any move below $3,168 could signal a deeper correction toward $3,000 and possibly $2,950. For now, the bias remains constructive as long as gold holds above the 50-day SMA.

Market Movers:

  • UnitedHealth Rebounds Sharply After Heavy Selloff: UnitedHealth surged 8.2% as investors bought the dip following last week’s 23% plunge. The stock recovered despite suspended guidance, a CEO change, and DOJ scrutiny. Its rebound helped lift the Dow and broader healthcare sector.
  • Reddit Slumps on Wells Fargo Downgrade: Reddit dropped 4.6% after Wells Fargo cut its rating to equal weight from overweight. Analysts cited search traffic disruptions linked to Google’s AI rollout. Concerns grew about long-term user acquisition and visibility.
  • Tesla and Palantir Extend Losses as Tech Wobbles: Tesla and Palantir both declined over 2% amid renewed tech sector pressure. Rising bond yields and cautious sentiment weighed on growth names. Their pullback contributed to the Nasdaq’s muted performance.
  • Regeneron Buys 23andMe Assets Out of Bankruptcy: Regeneron rose nearly 0.4% after agreeing to acquire key assets from 23andMe for $256 million. The deal excludes Lemonaid Health but adds valuable genetic data. Investors saw it as a strategic expansion move.
  • Alibaba Slips Amid US Concerns Over AI Dealings: Alibaba’s US-listed shares fell 0.4% after reports of scrutiny from the Trump administration. Officials raised concerns about Apple’s A.I. plans involving Alibaba in China. The news added geopolitical risk to tech ties.
  • TXNM Energy Surges on Blackstone Takeover Deal: TXNM jumped 7% after announcing its acquisition by Blackstone’s infrastructure unit. The all-cash deal values shares at $61.25 each. Investors welcomed the premium and strategic backing.
  • Softline Retailers Struggle as Closures Accelerate: UBS said soft goods store closures hit a 4.8% annual rate in March, up from 2.7% in December. Off-price names like TJX and Burlington expanded store counts by over 4%. UBS rates both stocks a buy.

Markets showed resilience Monday, overcoming early losses from Moody’s US credit downgrade and a surge in bond yields. Equities regained ground as yields eased and corporate resilience, including strong buying in UnitedHealth, helped offset tech weakness. Yet, warnings from JPMorgan’s Jamie Dimon about tariff complacency and UBS data showing accelerated store closures in softline retail underscore the fragility beneath the surface. With yields hovering near critical levels and tariff risks back in focus, traders face a test of conviction as economic and policy narratives evolve in the weeks ahead.