U.S. stock futures edged higher on Thursday, May 22, 2025, following a significant selloff driven by surging Treasury yields and concerns over the nation’s fiscal outlook. The S&P 500 futures rose by 0.2%, while Nasdaq 100 futures gained 0.3%, indicating a modest recovery attempt after the previous day’s sharp declines .

On Wednesday, the Dow Jones Industrial Average plummeted over 800 points, marking one of its steepest drops this year. The selloff was exacerbated by a disappointing 20-year Treasury bond auction, which saw tepid demand and pushed the 30-year yield above 5%—its highest level since November 2023 . The 10-year Treasury yield also climbed to approximately 4.61%, raising concerns about higher borrowing costs and their potential impact on economic growth.

Investors remain cautious amid ongoing worries about the U.S. fiscal trajectory, especially following Moody’s recent downgrade of the country’s credit rating from “Aaa” to “Aa1.” This downgrade has intensified fears over the growing national debt, which now exceeds $36 trillion

Despite the current volatility, some analysts maintain a bullish long-term outlook. Morgan Stanley, for instance, has shifted to a positive stance on U.S. equities, citing signs of market stabilization and improving growth conditions. The firm anticipates that the worst may be over for equities, projecting a base target of 6,500 for the S&P 500 by mid-2026 .

As markets navigate these turbulent times, investors are advised to stay informed and consider a cautious approach, balancing short-term risks with long-term opportunities.