Nasdaq 100, Dow Jones, S&P 500: Mixed Performance on Concerns over US Economy, Debt Ceiling

Highlights

• Stock market mixed: Dow and S&P 500 up, Nasdaq surges.
• U.S. economy concerns and debt ceiling discussions affect market.
• Meta’s rise drives Nasdaq gains; mergers and upgrades impact stocks.

Overview

On Monday, the stock market had a mixed performance. The S&P 500 and the Dow Jones Industrial Average both ended the day with small gains. This was due to concerns about a slowdown in the U.S. economy, which could have an impact on inflation.

At the same time, there were ongoing discussions about the debt ceiling. However, the Nasdaq had a positive day, thanks to an increase in Meta (formerly known as Facebook) shares.

The Dow Jones Industrial Average went up by 47.98 points or 0.14%, closing at 33,348.6. The S&P 500 increased by 12.2 points or 0.30%, ending at 4,136.28. The Nasdaq Composite saw the biggest gain, rising by 80.47 points or 0.66% to reach 12,365.21.

Empire State Manufacturing Index Plunges

The New York Federal Reserve’s “Empire State” index, measuring manufacturing activity in New York State, experienced a sharp drop in May, falling to -31.8, much lower than the expected -3.75.

While negative economic news can paradoxically be seen as positive for stocks, disappointing data releases still raise concerns about a potential recession. Traders ideally want the economy to be weak enough to reduce inflation but not weak enough to trigger a recession. It’s important to note that this index is considered volatile, potentially limiting its impact.

Debt Ceiling Talks Weigh on Market

In addition, ongoing negotiations between the White House and Republicans regarding the debt ceiling have contributed to a lackluster market. A meeting was scheduled, but the likelihood of reaching a deal was low. This recurring situation prompts traders to wait for a resolution through compromise, rather than engaging in a game of brinkmanship.

Indicators Shape Rate Expectations

Traders will closely monitor key economic indicators this week, including retail sales, weekly jobless claims, and housing data. Slower economic growth has raised expectations of the Federal Reserve pausing its interest rate hikes to curb high inflation.

Some Fed officials expressed expectations of sustained high-interest rates, contradicting market anticipation of a rate cut. Richmond Federal Reserve President Thomas Barkin remains cautious about inflation and supports a data-driven approach for further rate hikes. Traders will pay close attention to Fed Chair Jerome Powell’s remarks on Friday for insights into the trajectory of interest rates.

Meta Surges, Oneok Declines

In stock market news, Meta Platforms Inc. (formerly Facebook) saw a 2.16% increase, contributing to gains in the Nasdaq and S&P 500, following a rating upgrade by Loop Capital from “hold” to “buy.”

Conversely, Oneok Inc. experienced a significant decline of 9.06% after announcing an $18.8 billion deal to acquire Magellan Midstream Partners, while Magellan’s shares surged by 12.99% in response to the acquisition news.

Another notable move was observed in Western Digital Corp., which saw its stock price rise by 11.26% following reports of expedited merger discussions with its Japanese joint venture partner, Kioxia Holdings Corp.