US credit rating downgraded, inflation cooling with early tariff impact, some stocks expected to benefit

From Morningstar: 2025-05-22 05:12:00

The US credit rating was downgraded by Moody’s to AA1, but the impact on stock futures is minimal. Inflation numbers show a cooling trend, with some early signs of tariffs affecting durable goods prices. The Fed may wait to see the long-term impact of tariffs before making any rate changes. Lowe’s is expected to outperform Home Depot due to consumer behavior changes and tariff impacts.

Boeing and Lockheed Martin are stock picks benefiting from increased defense spending globally. Fluor and Wesco International are expected to benefit from new manufacturing capacity in the US. ASML, a leader in photolithography systems for high-end semiconductors, is poised to gain from new semiconductor fabs being built in the US. Walmart beat earnings expectations but warned of price increases due to tariffs, leading to an overvalued stock. Salesforce remains a favorite for its growth potential and strong balance sheet. REITs are undervalued and could be attractive for defensive-oriented investors. Stocks to watch include Nvidia, Home Depot, Lowe’s, Palo Alto, and Zscaler. Morningstar’s stock picks are based on undervaluation and potential benefits from recent trade deals.



Read more at Morningstar: 5 Stocks to Buy to Profit From Trump’s Trade Deals