Is Moody’s Downgrade the Crack in the Foundation That Finally Breaks Big Tech Or Should You BTMD?

Well, if this morning is any indication on how the rest of the week is gonna go… It might be time to buy some put options on Big Tech.

Because if you woke up, checked your portfolio, and thought, “Why does everything look like it’s been hit by a truck?”, you’re not crazy. At the time of writing, the S&P 500 futures are down more than 1% before markets even opened. Nasdaq futures are even uglier. And long-term Treasury yields? They blew past 5% like they were trying to relive their 2007 glory days. Why? Moody’s. The last of the “we still kind of trust America” credit rating agencies finally threw in the towel and downgraded the U.S. from Aaa to Aa1. That officially ends the fantasy that Washington can keep spending like a divorced dad at a Dave & Buster’s without consequences. The downgrade wasn’t exactly shocking (S&P and Fitch already beat them to the punch years ago) but it was Moody’s way of saying, “Hey, your debt problem is starting to smell.”

And it’s more than symbolic. This is the equivalent of your doctor telling you, “Look, we should’ve had this conversation six years ago.” Moody’s spelled it out: interest costs are exploding, deficits are getting worse, and lawmakers have shown zero ability (or desire) to fix it. They expect the federal deficit to hit nearly 9% of GDP by 2035… up from 6.4% today (not sure how everyone thinks this is ok, it’s definitely not).

As a result, the 30-year Treasury yield ripped past 5.02% this morning, while the 10-year climbed to 4.54%. These levels are more than “concerning,” they’re the kind that make mortgage rates spike, credit card debt more painful, and borrowing for everyone (including the government) a whole lot pricier. And when yields rise like this, US and international investors start asking themselves if the U.S. is still the “safe haven” it used to be. Now, you might be wondering… what’s this got to do with Big Tech? Everything. Tech stocks, especially the so-called Magnificent Seven (Apple, Amazon, Nvidia, Alphabet, Microsoft, Meta, and Tesla) are built on the assumption that money is cheap, and the future is worth paying a premium for. But when Treasury yields spike, those future earnings get discounted and mean way less. Higher rates make it way less attractive to own stocks that are priced for perfection five years from now.That’s when Big Tech’s shine starts to look like a liability.

The other problem is that foreign money is starting to look elsewhere. Between the downgrade, surging deficits, and a dollar that’s been trending lower, investors from abroad are beginning to wonder if they still want to be holding U.S. assets. As ECB President Christine Lagarde put it, the recent dip in the dollar reflects “uncertainty and loss of confidence in U.S. policies.”

And just to show you why self awareness is a rare commodity, we’ve got Treasury Secretary Scott Bessent going on national TV and brushing it all off like it’s no big deal. Called Moody’s downgrade a “lagging indicator,” and randomly mentioned that he talked to Walmart’s CEO, who supposedly agreed to “eat the tariffs” so consumers wouldn’t feel the sting. Okay, but that doesn’t fix a $36 trillion debt problem or calm a market that’s clearly spooked.

Wall Street has a short memory, sure… but today was a loud reminder that the problems bubbling under the surface haven’t gone away. If anything, they’re starting to crack through the foundation. So while some analysts (hey, Morgan Stanley) are telling people to buy the dip, it’s also important to protect yourself in case this gets ugly.

PS: It’s a mess out there.

One day the market’s ripping, the next day it’s Black Monday all over again. Recent earning’s reports have been a total coin flip. One stock beats and explodes 30%… the next misses by a penny and gets sent to the Shadow Realm. And through it all, everyone’s begging for Jerome Powell to finally cave and cut rates.

But underneath all the panic headlines (“Inflation too sticky!” “Recession imminent!” “Tariffs round 4 incoming!”) something wild is happening…

We’re seeing violent price action. Especially in the small-cap space, where low floats and high anxiety are creating the perfect recipe for 100%+ pops before lunchtime. Some of these names are moving 200%+ in under 24 hours… and to our knowledge, NO ONE else is covering them.

Except us.

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Stock.News has positions in Apple, Amazon, Alphabet, Microsoft, Meta, and Tesla.