Stock Market News for May 10, 2023
U.S stocks closed lower on Tuesday as investors grew cautious ahead of the key consumer price index report due on Wednesday and a meeting between the U.S. political leaders on the debt ceiling. Investors also digested a batch of mixed earnings reports. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.2% or 56.88 points to end at 33,561.81 points.
The S&P 500 dropped 0.5% or 18.95 points to finish at 4,119.17 points, ending its two-day winning streak. Materials, tech and communication services stocks were the worst performers.
The Communication Services Select Sector SPDR (XLC) lost 0.6%. The Technology Select Sector SPDR (XLK) declined 0.8%, while the Materials Select Sector SPDR (XLB) fell 0.9%. Nine of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq slid 0.6% or 77.36 points to close at 12,179.55 points.
The fear-gauge CBOE Volatility Index (VIX) was up 14.30% to 17.71. Decliners outnumbered advancers on the NYSE by a 1.59-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored declining issues. A total of 9.35 billion shares were traded on Tuesday, lower than the last 20-session average of 10.68 billion.
Markets Await CPI, PPI Reports
Investors are awaiting key inflation reports later this week, with the consumer price index reading due to be out on Wednesday, followed by the producer price index. The reports are expected to give a clearer picture of how the Fed’s future rate-hike path.
If the reports hint at slowing inflation, the Fed might consider slashing interest rates later this year or also pause hiking interest rates. However, that may not be the case also as Fed Chair Jerome Powell and other central bank officials might differ with investors over the chances of rate cuts in the coming months.
Although a large number of market participants expect the Fed to pause hiking interest rates at its June meeting, the central bank in its last meeting said that it will take a decision based on the data as it comes in.
Leaders Meet to Discuss Debt Ceiling
Investors were also closely watching a meeting hosted by President Joe Biden with House Speaker Kevin McCarthy on Tuesday afternoon to get an update on plans for the debt ceiling. It needs to be seen if they reach a deal. However, analysts suggest not to expect a deal.
McCarthy and Biden continue to disagree over the House Speaker's demand that any agreement to raise the debt ceiling be contingent on expenditure cuts. The debt ceiling cannot be raised, according to Biden.
If Congress does not take action to break the deadlock, fears of a possible government default might start to spread over Washington as early as Jun 1.
Investors also digested mixed earnings reports from a batch of companies. Shares of PayPal Holdings, Inc. (PYPL) tumbled 12.7% after the company cut its margin forecast despite its earnings and revenues topping estimates.
The company reported quarterly earnings of $1.17 per share, beating the Zacks Consensus Estimate of $1.10 per share. PayPal has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Shares of Skyworks Solutions, Inc. (SWKS) fell 5.2% after it forecast current-quarter earnings and revenues below estimates.
No major economic data was released on Tuesday.
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