By Shashwat Chauhan and Kanchana Chakravarty

(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 (NASDAQ: TSLA ) 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 jumped 7.3% after the utility said it would be acquired by the infrastructure unit of Blackstone (NYSE: BX ) 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.