Debt Ceiling, Nothing Else Matters (May 17 Market Recap).
Indices
Dow 33,426, +126 or +0.38%.
Nasdaq 12,657, +373 or +3.04%.
MSCI EAFE 2131.59, +5.33 or +0.25%.
S&P 4,191, +67 or +1.62%.
USD10Y 3.692%, +22.9bp or +6.61%.
WTI Crude $71.67 bbl, +$1.58 or +2.25%.
Debt Ceiling: Nothing Else Matters.
Time is quickly winding down on Congress to pass a bill raising the debt ceiling. Speaker McCarthy stated that a deal needed to be completed by the end of the weekend in order for there to be time for both the House and Senate to pass the bill and present it to the President’s desk for his signature. Not only has a deal not been struck but the GOP leadership has broken off negotiations until President Biden returns from his G7 meeting in Japan on Sunday.
In the meantime, among the Democratic caucus, support has been growing in favor of invoking Section 4 of the 14th Amendment to the Constitution to invalidate all debt ceiling legislation.
Next Week
Additional insight as to the health of the U.S. consumer will be found in the earnings reports from Lowe’s, Williams Sonoma, Kohls, and Costco. Further, the all-important April Personal Consumption Expenditure report will be released giving the Federal Reserve another inflation data point.
Economic Calendar
- Monday – N/A. Earnings: Zoom (ZM).
- Tuesday – May Flash S&P U.S. Manufacturing and Services PMI. Earnings: Lowe’s (LOW), William Sonoma (WSM).
- Wednesday – May FOMC minutes. Earnings: Nvidia (NVDA), Kohls (KSS).
- Thursday – Initial Jobless Claims, Q1 GDP (second reading). Earnings: Costco (COST).
- Friday – April Durable Goods Orders, April Personal Consumption Expenditure Index.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
May 17 Daily Trading Recap…
Monday – Dow +48 to 33,348, Nasdaq +80 to 12,365, S&P +12 to 4,136, USD10Y +4.5bp to 3.508%.
- Six of eleven S&P sectors traded higher today, led by Materials, Financials, and Technology.
- The May Empire State Manufacturing Survey was horrendous at -31.8 vs expectations of down -5.0 and vs last month’s down -10.8 print.
Tuesday – Dow –56 to 33,561, Nasdaq –77 to 12,179, S&P –18 to 4,119, USD10Y +0.0bp to 3.521% .
- Nine of eleven S&P sectors traded down, led lower by Real Estate, Energy, and Utilities.
- April Retail Sales missed expectations by half, coming in at +0.4% vs +0.8% expected and vs last month’s -0.7% print.
- Earnings: Home Depot (HD) beat their earnings expectations but suffered their worse revenue miss in twenty years. Further, they guided full-year sales lower. HD traded down 2.15% during the normal session.
Wednesday – Dow +408 to 33,420, Nasdaq +157 to 12,500, S&P +48 to 4,158, USD10Y +3.2bp to 3.581%.
- Nine of eleven S&P sectors traded up, led by Financials, Energy, and Consumer Discretionary.
- Markets rallied on reports that debt ceiling negotiations were progressing.
- Western Alliance (WAL), one of the scrutinized regional banks, popped +10.2% during the normal session after announcing deposit growth of more than $2 billion thus far this quarter. The SPDR Regional Bank ETF, KRE, rose +7.4% on the day.
- Earnings: Cisco Systems (CSCO) beat their numbers and raised full year guidance. Target (TGT) beat their numbers and reaffirmed their full year guidance. TJ Maxx (TJX) beat their earnings estimates but missed on revenues and guided although they guided full year estimates higher, those estimates were below Street consensus.
Thursday – Dow +115 to 33,535, Nasdaq +188 to 12,688, S&P +39 to 4,198, USD10Y +6.7bp to 3.648%.
- Seven of the eleven S&P sectors traded up, led by Technology, Communication Services, and Consumer Discretionary.
- Jobless claims fell to 242,000 vs the 254,000 forecast and last week’s unrevised print of 264,000.
- May Philadelphia Federal Manufacturing Survey was better than expected at –10.4 vs expected –20.0 and vs last month’s -31.3.
- Earnings: Ross Stores (ROST) beat numbers but offered cautious guidance going forward; ROST traded mostly flat in post-close trading. Walmart (WMT) beat their numbers and guided higher.
Friday – Dow -109 to 33,426, Nasdaq -30 to 12,657, S&P -6 to 4,191, USD10Y +4.4bp to 3.692%.
- Seven of eleven S&P sectors traded down today, led lower by Consumer Discretionary, Communication Services, and Financials.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.