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Indexes down: Dow 0.15%, S&P 500 0.30%, Nasdaq 0.48%

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Blackstone infrastructure unit to acquire TXNM Energy ( TXNM )

(Updates with afternoon trading levels)

By Shashwat Chauhan and Kanchana Chakravarty

May 19 (Reuters) -

Wall Street's main indexes slipped on Monday and Treasury

yields spiked after Moody's surprise downgrade of the U.S.

sovereign credit rating due to mounting debt sparked anxiety

about the fiscal outlook.

Moody's cut the U.S. sovereign credit rating to "Aa1" from

"Aaa" late on Friday due to concerns about its ballooning

$36-trillion debt, becoming the last of the three major credit

rating agencies to downgrade the country. It had first given the

United States its pristine "Aaa" rating in 1919.

Worries about the ever-increasing U.S. deficit were front

and center as President Donald Trump's sweeping tax-cut bill -

which Republican infighting over spending cuts had stalled for

days - won approval from a key congressional committee on

Sunday.

"The overall mood across markets is not of panic but of

re-rating the same risks that started with the new Trump

administration," said Bob Savage, head of markets macro strategy

at BNY.

"The equity market moves are likely to focus on leverage

in companies and what the debt downgrade could mean to

borrowers."

At 11:32 a.m. ET, the Dow Jones Industrial Average

fell 65.05 points, or 0.15%, to 42,589.69, the S&P 500

lost 18.10 points, or 0.30%, to 5,940.18 and the Nasdaq

Composite lost 92.68 points, or 0.48%, to 19,118.42.

Six of the 11 S&P sub-sectors fell, with consumer

discretionary and energy being the worst

performers.

Most megacap and growth stocks recouped some of their

losses around noon, though Tesla lagged with a 3.1%

fall.

Highly valued tech stocks were pressured as rising rates

tend to discount the present value of future profits.

Chip stocks also sold off, with a gauge for semiconductor

stocks losing 0.9%.

Still, stocks were off their lows, with yields on U.S.

government bonds, which move inversely to prices, also easing

from highs.

The 10-year note rose 5 basis points to

4.49% and the 30-year note touched 4.96%.

The S&P 500 had registered its fifth straight day of

gains on Friday, closing out the week with firm gains as markets

took heart from a temporary tariff truce 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

did not negotiate deals in "good faith".

The U.S. Federal Reserve might only be able to cut interest

rates by a quarter point through the rest of the year, Atlanta

Fed president Raphael Bostic said, while New York Fed President

John Williams said that the interest-rate policy was well placed

to deal with an uncertain economic outlook.

TXNM Energy ( TXNM ) jumped 7.3% after the utility said it

would be acquired by the infrastructure unit of Blackstone

in an $11.5-billion deal.

Declining issues outnumbered advancers by a 2.24-to-1 ratio

on the NYSE and by a 1.86-to-1 ratio on the Nasdaq.

The S&P 500 posted 22 new 52-week highs and no new lows,

while the Nasdaq Composite recorded 36 new highs and 45 new

lows.