Dip Buyers Support Stocks as Bond Market Assesses US Downgrade

Stock traders knew it was an ugly setup entering Monday, with futures lower in premarket action and Treasury yields racing higher after Moody’s downgraded the US debt at the very end of last week.

But then a weird thing happened as trading got underway: The bond market calmed down. The yield on 10-year Treasuries, which had leaped the highest since February, began to fall, eventually dropping below where it started the session. That gave small investors in the stock market the all-clear sign to buy the dip, dragging the S&P 500 Index most of the way out of a decline that had reached more than 1% to finish up 0.1%.