US STOCKS-US stock futures slide after Moody's downgrade, yields up

By Shashwat Chauhan and Kanchana Chakravarty

May 19 (Reuters) - Wall Street futures fell and Treasury yields rose on Monday after Moody's downgraded the U.S. sovereign rating, sharpening focus on the country's mounting debt.

Moody's cut the United States' sovereign credit rating to "Aa1" from "Aaa" late on Friday owing to concerns about its growing $36-trillion debt, becoming the last of the three major credit agencies to downgrade the country's rating.

It had first given the U.S. its pristine "Aaa" rating in 1919.

"Overall, we view this latest credit action as a headline risk rather than a fundamental shift for markets," Mark Haefele, chief investment officer at UBS Global Wealth Management said in a note.

"While the downgrade may lean against some of the recent 'good news' momentum, we do not expect it to have a major direct impact on financial markets."

Worries about the ever-increasing U.S. deficit were front and center as U.S. President Donald Trump's sweeping tax-cut bill - which had been stalled for days by Republican infighting over spending cuts - won approval from a key congressional committee on Sunday.

At 07:22 a.m. ET, Dow E-minis YMcv1 were down 261 points, or 0.61%, S&P 500 E-minis EScv1 were down 62.5 points, or 1.05%, and Nasdaq 100 E-minis NQcv1 were down 304.5 points, or 1.42%.

Meanwhile, yields on U.S. government bonds - which move inversely to prices - ticked higher, with the 10-year note US10YT=RR rising 10.9 basis points to 4.54% and the 30-year note US30YT=RR touching 5.02%.

Highly valued technology stocks took a hit in premarket trading as rising rates tend to discount the present value of future profits.

Tesla TSLA.O led losses among megacap and growth stocks with a 3.4% fall.

Chip stocks also sold off, with Advanced Micro Devices AMD.O and Nvidia NVDA.O dropping more than 2% each, and Intel INTC.O losing about 1%.

The S&P 500 .SPX had registered its fifth straight day of gains on Friday, closing out the week with firm gains as markets took heart from a temporary truce on the trade front between the U.S. and China, along with tame inflation data.

U.S. Treasury Secretary Scott Bessent said in television interviews over the weekend that Trump would impose tariffs at the rates he had threatened last month on trading partners that do not negotiate deals in "good faith".

The quarterly earnings season is winding up as more than 90% of S&P 500 companies have reported results.

Dow .DJI component Home Depot HD.N and retailer Target TGT.N are among those slated to report earnings later this week.

The Federal Reserve is also in focus. At least five officials including New York Fed President John Williams are scheduled to make public remarks through the day.

In other moves, Netflix NFLX.O fell 1.6% after J.P.Morgan removed the stock from its U.S. Analyst focus list.

TXNM Energy TXNM.N jumped 9.5% after the utility said it would be acquired by the infrastructure unit of Blackstone BX.N in an $11.5-billion deal.