Advertisement
Advertisement

NASDAQ 100, Dow Jones, S&P 500: Investor Confidence Grows Amidst Debt Ceiling Talks, Strong Earnings

By:
James Hyerczyk
Published: May 19, 2023, 09:05 UTC

US Stock market investor confidence boosted as U.S. congressional Republican Kevin McCarthy sees debt ceiling deal potential by next week.

S&P 500 Index, NASDAQ Composite, Dow Jones

In this article:

Highlights

  • U.S. stocks rise on optimism about a debt ceiling deal.
  • Walmart’s upbeat forecast boosts market sentiment.
  • Federal Reserve’s interest rate stance remains uncertain.

Overview

On Friday, the early stock market action saw the S&P 500 edging slightly higher as investors closely monitored the situation surrounding the debt ceiling. Futures linked to the Dow Jones Industrial Average rose by 20 points, a 0.06% increase, while S&P 500 and Nasdaq-100 futures showed gains of 0.14% and 0.19% respectively.

Daily S&P 500

Debt Ceiling Concerns Grow: Potential Deal Looms

Investors remained focused on news related to the debt ceiling, with concerns growing as June 1, the earliest possible day for a U.S. default, approaches. House Speaker Kevin McCarthy’s comments on Thursday hinted at the potential for a deal to be reached as early as next week.

The uncertainty surrounding the government’s ability to meet its financial obligations creates a risky environment, but many believe that the markets will ultimately experience an outcome that won’t cause significant damage in the long term.

Ross Stores, Applied Materials Slide

Ross Stores experienced a slight decline in overnight trading despite beating earnings expectations but expressing a cautious outlook. Similarly, Applied Materials saw a 1.4% decrease despite surpassing earnings estimates.

Earnings Wrap-Up: Deere, Foot Locker

In terms of earnings, the tail-end of the season featured reports from Deere and Foot Locker before the bell. Economic data was limited on Friday. However, market participants anticipated comments from Federal Reserve Chair Jerome Powell and New York Fed President John Williams.

Thursday Recap:  U.S. Stocks Rise on Optimism of Debt Ceiling Deal, Walmart’s Upbeat Forecast

U.S. stocks closed higher for a second consecutive day on Thursday, driven by mounting optimism that a U.S. debt ceiling deal could be reached in the near future. This positive sentiment was further reinforced by discount retailer Walmart Inc, which provided additional support with its upbeat annual sales forecast.

The Dow Jones Industrial Average rose 115.14 points (0.34%) to close at 33,535.91, while the S&P 500 gained 39.28 points (0.94%) to end at 4,198.05. The Nasdaq Composite added 188.27 points (1.51%) and finished at 12,688.84. The S&P 500 registered 27 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 88 new highs and 83 new lows.

Optimism Soars: Debt Ceiling Deal Hope

Investor confidence rose as top U.S. congressional Republican Kevin McCarthy expressed optimism about a potential deal to raise or suspend the debt ceiling. McCarthy believes a House vote on the matter could happen next week. President Joe Biden and McCarthy are committed to reaching an agreement soon. They have scheduled discussions for as early as Sunday.

Debt Ceiling Overshadows Fed’s Rate Uncertainty

The debt ceiling issue has dominated headlines, drawing attention away from uncertainty surrounding the Federal Reserve’s stance on interest rates. Economic data showed a larger-than-expected drop in new jobless claims, indicating a tight labor market. This gives the Federal Reserve more leeway to raise rates. However, Fed officials’ comments suggest that they have not yet prepared to reduce or pause rate hikes. Market expectations anticipate a rate cut by year-end, but the Fed’s position appears different.

Walmart’s Strong Earnings Propel Shares

Amidst these developments, Walmart’s first-quarter earnings exceeded expectations. The company also raised its sales and profit outlook. As a result, Walmart’s shares rose by 1.30% to $151.47. Growth stocks such as Synopsys, Netflix, Micron Technology, and Take-Two Interactive Software also performed strongly. This was notable considering the increase in the 10-year U.S. Treasury yield.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement