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 were down 261 points, or 0.61%, S&P 500 E-minis were down 62.5 points, or 1.05%, and Nasdaq 100 E-minis 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 rising 10.9 basis points to 4.54% and the 30-year note 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.
Reporting by Shashwat Chauhan and Kanchana Chakravarthy in Bengaluru; Editing by Varun H K and Pooja Desai
