The DOW JONES fell 0.09% to 33,064 points, while the S&P 500 gained 0.46% to 4,224 points. The NASDAQ 100 rose 1.10% to 13,118 points.
The major New York indices remained closed yesterday Monday for Memorial Day. Last week, the Nasdaq Composite and S&P 500 posted gains while the Dow continued to lag.
Like last week, all lights remain on the debt ceiling. US President Joe Biden and House Majority Leader Kevin McCarthy agreed at the weekend to raise the debt ceiling and prevent a default. The agreement comes a few days ahead of the so-called “X-date,” June 5, the earliest date the Treasury Department has said the US could default on its debt obligations. The first engagement was first announced on Saturday night.
Protracted negotiations between the White House and members of Congress have raised fears among investors that the US could default. Wall Street has already struggled with persistent inflation and a banking crisis this year.
Basically, the text is expected to be voted on in the House of Representatives tomorrow, Wednesday, and will go to the Senate for approval later this weekend. However, some doubts have been raised about a possible “rebellion” by some lawmakers.
“While some of the most radical Republicans and Democrats will likely vote against, we believe so.” The bill will receive enough votes from lawmakers of both parties in both chambers,” said Juan J. Fernández-Figares, analyst at Link Gestión. “Any other scenario than this would lead to severe tensions in the stock markets. Nevertheless, it is quite possible that until the text is approved, investors will continue to act with great caution, which will continue to be reflected in a lower than usual level of activity on the European and American stock markets.
Assuming Congress passes the debt deal, it is estimated that the Treasury Department could sell more than $1 trillion in notes by the end of the third quarter to bolster its treasury stocks, depriving other markets of the liquidity they need need to maintain their profits.
For Federal Reserve policymakers, the details of the deal will be another factor to consider when they meet on June 14, as analysts are expecting a pause in rate hikes, which could return to 25 points in July.
On the macro front, intense competition in the property market and tight supply are fueling property prices again. At national level Home prices in March were 0.7% higher than in March 2022, the S&P CoreLogic Case-Shiller Index reported on Tuesday..
Also released this morning is the Conference Board Consumer Confidence Index for the month of May, an index that is expected to have deteriorated slightly from the previous month. This week the focus is on the US jobs data which is due out on Friday. Economists are forecasting a rise of 200,000 in May, below the average monthly growth of 370,000 last year.
On the business side, investors must continue to pay attention to the price of NVIDIA, one of the big protagonists of the year A spectacular 170% re-rating over the year that has pushed the market cap to nearly $1 trillion, which it could surpass today. CEO Jensen Huang predicts that the world is entering a “new computer age”.
Speaking at the Computex Taiwan forum, he explained that programmers no longer need to write lines of code to get the dreaded “compilation error” due to missing semicolons. “This computer doesn’t care how you program it, it will try to understand what you mean because it has this amazingly amazing language modeling ability. Therefore, the planning hurdle is incredibly low,” says Huang. Nvidia claims that generative AI is the “most important computing platform of our generation”.
Among the companies yet to report results, it’s HP’s turn today, while tomorrow its Salesforce accounts will be announced.
In terms of analyst recommendations, ChargePoint climbs 5% after lBank of America experts upgraded recommendation for electric vehicle charging station companies to buy. The company believes ChargePoint is the best choice for EV charging and highlights the company’s scale and diversity as key to sustained growth.
There is also good news for Ford Motor after Jefferies upgraded its rating, saying the automaker has a strong plan and management that can help it close the gap on its peers. The analyst is also raising his price target on his shares, with more than 30% upside potential.
Another stock to watch closely today will be Tesla. According to Reuters CEO Elon Musk’s private plane recently arrived in China. Musk is expected to meet with senior Chinese officials and visit Tesla’s Shanghai plant, the British agency notes. Additionally, last week Tesla and Ford announced a partnership that will give Ford owners access to Tesla Superchargers.
In commodity markets, oil prices reversed and fell sharply again, with investors focused on this weekend’s meeting of producing countries and debt ceiling negotiations. U.S. oil futures fell 3.16% to $70.59, while benchmark European Brent crude fell 2.90% to $74.88.
In fixed income, the US 10-year yield is down 10 points to 3.719%, while the 2-year yield is down seven points to 4.514%.
The euro reverses and rebounds against the dollar, up 0.25% to a cross of $1.0737 per single currency.