Stocks mixed ahead of renewed debt talks: Stock market news today
Here's what's moving markets on Monday, May 22, 2023.
Stocks closed mixed on Monday as President Joe Biden and House Speaker Republican Kevin McCarthy prepared to meet to resume debt-ceiling negotiations later in the day, amid warnings a disastrous default is less than two weeks away.
The S&P 500 (^GSPC) finished flat, while the Dow Jones Industrial Average (^DJI) fell 0.42% or more than 100 points. The technology-heavy Nasdaq Composite (^IXIC) rose 0.50% at the close.
Wall Street is bracing for crunch time in the debt-ceiling showdown, as the risk of a government default becomes more real. Anxiety is mounting, and Wall Street banks and asset managers are preparing for the fallout from a potential default, in case an extension or agreement fails to be hammered out in Washington.
After a weekend of near deadlock, Biden returned back to Washington Sunday, ending his trip to Asia short to resume talks. Treasury Secretary Janet Yellen reiterated the US faces a June 1 "X-date" deadline for default.
There are "parallels between a potential debt default and past geopolitical shocks in that both entail large but difficult to quantify risks," Deutsche Bank analyst Parag Thattle wrote in a research note. "The typical S&P 500 trajectory around those shocks is a good template to consider: sharp (-6% to -8%) but short-lived selloffs (3 weeks down, 3 weeks to recover)."
In the Treasuries market, yields on the short term were higher, the two-year note rose to 4.3%, while that on the 10-year Treasury traded up to 3.7%.
In the meantime, Minneapolis Fed President Neel Kashkari, a voting member of the Federal Reserve, signaled he’s open to holding interest rates steady in June so the central bank can assess the impact of its outsized hikes on inflation. Separately, Federal Reserve Bank of St. Louis president James Bullard said Monday he favors two more rate hikes "sooner rather than later" for 2023.
Against the current uncertain backdrop, several Fed board members are on the speech circuit this week, and the minutes of the last policymakers' meeting is set for release on Wednesday.
Also on Wall Street’s plate this week are earnings from retailers Dollar General (DG), Costco (COST), and BJ's (BJ) which should give a deeper understanding of the health of the consumer.
Meanwhile, chipmakers were under pressure as Micron Technology, Inc. (MU) shares sank about 2% after Beijing banned some Chinese tech manufacturers from using the US company's chips. The move could further stoke existing tensions with the US over technology and security.
In single stock moves, shares of Meta Platforms, Inc. (META) rose more 1% after the Facebook owner was hit by a record 1.2 billion euro ($1.3 billion) European Union privacy fine and given a deadline to stop sending European users’ data to the US.
Shares in Adani Enterprises (ADANIENT.NS), the flagship company of Adani Group, jumped more than 18% after a committee appointed by India’s top court cleared the conglomerate of any regulatory failure, as alleged by US short-seller Hindenburg Research.
DraftKings Inc. (DKNG) shares soared more than 4% after UBS analyst Robin Farley upgraded the stock to buy from neutral Monday, writing of her expectation that the company can gain traction in new states more quickly than it did in past markets it has entered.
NVIDIA (NVDA) shares ticked lower after the chipmaker said on Monday it has worked with the UK's University of Bristol to build a new supercomputer using a new Nvidia processor. The move gives the world's top maker of AI-focused graphics processing units (GPUs) its own central processing unit (CPU), a market dominated by Intel (INTC) and Advanced Micro Devices (AMD).
Shares of PacWest Bancorp (PACW) climbed more 19% Monday morning after the regional lender said on Monday it had agreed to sell a portfolio of 74 real estate construction loans, posing fresh risk to the regional banking sector.
Still, on the banking front, JPMorgan Chase (JPM) boosted its outlook a month after the government-brokered takeover of First Republic. President Daniel Pinto said during investor day “We cannot ignore that there are plenty of challenges." But “the US economy at the moment is doing fine,” he adds, though the bank sees “signs of deterioration.” Shares edged down Monday following the announcement.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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