Market Monitor News May 20 (United Health UP - Tesla DOWN)

Markets Close Mixed Following Credit Downgrade, AI Moves, and Economic Concerns

U.S. stock markets closed modestly higher on Monday despite lingering concerns over a credit rating downgrade by Moody’s. The Dow Jones rose 0.3%, the S&P 500 gained 0.1%, while the Nasdaq ended nearly flat.

Markets initially dipped following the news that Moody’s downgraded the U.S. credit rating from Aaa to Aa1, citing the unsustainable trajectory of national debt and rising refinancing costs. Still, optimism returned during the session as yields retreated slightly and investors absorbed the downgrade as a long-anticipated move.

Some strategists, like Michael Wilson from Morgan Stanley, warned that the downgrade increases downside risk, though he still recommended buying the dip. Others dismissed the move as a "non-event," noting that the fiscal outlook had already been priced in.

UnitedHealth Leads S&P 500 Surge

UnitedHealth (UNH | +8.21%) was the top performer in the S&P 500. The stock rebounded sharply after recent losses, driven by insider confidence, newly appointed CEO Stephen Hemsley and CFO John Rex acquired approximately $30 million in shares. Hemsley alone accounted for $25 million of that total, with several board members also buying in.

This insider buying spree helped reverse negative sentiment after last week's guidance withdrawal and restored investor confidence in the healthcare giant.

Nvidia's Ecosystem Expansion Raises Questions

Nvidia (NVDA | +0.13%) announced that its AI platform will now support non-Nvidia chips via a new interconnect technology, NVLink Fusion. This allows various chip types, including custom ASICs used by tech giants like Microsoft and Amazon, to integrate more effectively with Nvidia systems.

While the move opens doors for collaboration, it also raises concerns about increasing competition.

Still, Nvidia retains key competitive advantages through its proprietary AI software stack, which remains exclusive to its own GPUs. Additionally, the company announced a partnership with Abu Dhabi’s MGX and several French firms to build Europe’s largest AI data center.

Coinbase Slips Despite S&P 500 Entry

Coinbase (COIN | -0.93%) fell on its first trading day as a member of the S&P 500. The crypto exchange has faced headwinds after disclosing a cyberattack last week. Adding to the pressure, The New York Times reported that the SEC is investigating the company over potentially misleading information about its user base.

Despite the milestone inclusion, the recent negative headlines kept investor enthusiasm at bay.

Walmart Faces Heat Over Tariff Price Warnings

Walmart (WMT | -0.12%) came under political fire after warning that it may need to raise prices due to renewed U.S. import tariffs. President Trump responded critically, suggesting that the retail giant should absorb the cost increases rather than passing them to consumers.

JPMorgan Issues Stagflation Warning

JPMorgan Chase (JPM | -1.0%) CEO Jamie Dimon cautioned investors about the rising risk of stagflation, a toxic mix of slow growth, high inflation, and elevated unemployment—during the bank’s investor day.

Dimon emphasized growing geopolitical instability and said that previous tariff policies under Trump remain “extremely aggressive.” He also reiterated his intention to step down as CEO in the coming years.

On the AI front, JPMorgan CFO Jeremy Barnum highlighted the bank’s accelerated adoption of AI coding tools in 2024, underscoring that JPMorgan is past the peak in modernization spending. Regarding crypto, Dimon remained skeptical but acknowledged customers' rights to own Bitcoin.

Tesla Drops on Disappointing Global Sales

Tesla (TSLA | -2.25%) continued to slide as investors reacted to sluggish delivery data.

U.S. sales were down 13% in April, and declines in key European markets, including Germany and France, exceeded 45% year-over-year.

Commodities and Rates

• Gold rose 1.4% to $3,232 per troy ounce, reflecting increased risk aversion.

• WTI crude oil climbed 0.3% to $62.69 per barrel.

• U.S. Treasury yields spiked, with the 30-year rate briefly crossing 5% before settling at 4.92%.

• The EUR/USD exchange rate rose to 1.1240.

Earnings Ahead

Several major companies are set to report earnings today or tomorrow, including:

Home Depot (HD | -0.37%) - May 20

PDD Holdings (PDD | +0.71%) - May 20

Palo Alto Networks (PANW |+0.68%) - May 20

TJX Companies (TJX | +1.27%)

Snowflake (SNOW | -0.56%) - May 21

Baidu (BIDU | -0.1%) - May 21

Next to read: Market Monitor Trends & Breadth, May 20