Stocks have suffered their first meaningful pullback since regaining their momentum in a rally that took them off last month's lows and more than erased the losses suffered after the April 2 rollout of President Donald Trump's sweeping tariff measures.

Moody's also cited House Republicans' "One, Big, Beautiful Bill," which is attempting to make temporary tax cuts established in the 2017 Tax Cuts and Jobs Act permanent, along with new tax cuts as well. Moody's estimates an extension would result in an additional $4 trillion to fiscal deficit, excluding interest payments, over the next decade.

U.S. stocks closed higher after an unsurprising US credit rating downgrade. Treasury yields rise. S&P 500 extends winning streak to six days.

U.S. stocks finished near the unchanged mark on Monday with market sentiment weakened by the downgrade of the federal government's perfect sovereign credit rating owing to its huge debt profile.

Fears over Trump's multitrillion-dollar budget plan and rising inflation drive the Dow 800 points lower and Treasury yields to their highest levels in more than a year.

This was the stock's second consecutive day of losses.

The S&P 500 recently flashed a technical sell signal, Bank of America said, which can suggest a near-term drop in stock prices.

After recovering from an initial jolt, U.S. stocks drifted through quiet trading following the latest reminder that the U.S government may be hurtling toward an unsustainable mountain of debt.

All three major U.S. stock market indexes rose Monday afternoon, following an earlier selloff sparked by long-dated Treasury yields surpassing the 5% mark after the financial ratings agency Moody’s downgraded the U.S. government’s credit rating late last week, citing rising debt and interest payment ratios.